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Kier maintains margins and grows turnover and profit

Kier has maintained its operating margins as the acquisition of May Gurney boosted its turnover and profit levels in the six months to December 2013.

The group’s turnover in the half year was £1.4bn, up from £976m for the same period in 2012, a rise of 47 per cent following the purchase of May Gurney in July last year.

Operating profit before exceptional items was £44.4m, 96 per cent up on 2012, while pre-tax profit grew 90 per cent to £36.8m

Excluding May Gurney, Kier still grew turnover by 12 per cent in the six months, with operating profit up 34 per cent.

Kier said it had acquired more than £1.5bn in new work during the six month period, with 100 per cent of forecast revenue for construction secured.

The firm posted a 2.3 per cent operating margin for its construction business and a 4.3 per cent margin for services.

Revenue for construction was 18 per cent up on 2012 at £742m, while operating profit had a strong 28 per cent rise to £17.3m.

Kier said the strong results for construction were due to “significant awards” primarily through frameworks, and a “solid contribution from the infrastructure and overseas businesses”.

Education work delivered 24 per cent of construction revenue, while UK infrastructure awards included £20m in rail sector projects on the back of the May Gurney acquisition and the £177m Deephams sewage treatment works upgrades as part of a joint venture with Aecom and Murphy.

The contribution from May Gurney boosted the services division’s revenue to £563m, a 167 per cent rise on 2012, while Property, which includes Kier Homes, was down 19 per cent on turnover to £55m, but 56 per cent up on operating profit at £11.1m.

The group’s net debt was £138m, after the acquisition of May Gurney and investment into new development schemes, housing land and affordable housing work in progress.

Kier chief executive Paul Sheffield, who steps down on 30 June, said: “We are pleased with the performance of the May Gurney business which is operating in line with our expectations. The acquisition has consolidated the group’s position in support services, providing a range of complementary services to clients in the highways, transport and utilities sectors.

“The integration remains on course, with good customer retention, new extended contracts and revenue synergies. We are on track to deliver the anticipated £5m cost savings in this financial year. The construction and property divisions continue to strengthen.”

Read More:

See cnplus.co.uk on Monday for Construction News’ interview with Paul Sheffield and incoming chief executive Haydn Mursell.

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