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Company spotlight: Kier


GLEESON'S recent woeful results posed questions over mixing contracting, housing, property and Private Finance Initiative work.

The firm's retreat from building leaves only Kier and Galliford Try working to this hybrid model, though Pochin is trying to adopt this strategy on a smaller scale.

Kier succeeds by keeping clear of the risky projects that sank holes into the accounts at Gleeson's building arm.

Kier still loses money in areas such as its social housing arm, which will not break into profit until next year, but the rest of the business is always able to offset these problems.

Rok's ambitious expansion in contracting is aimed at being 'everyone's local builder' - a strategy Kier achieved some time ago with a big network of regional companies working under the group banner.This is the area that brings in the cash but housing is also growing.

Margins are at the lower end of the quoted contingent - 14.7 per cent at the half-year - but this arm is again expanding through a range of smaller brands such as Allison or Twigden.

With Countryside and Country & Metropolitan exiting the market - and Crest perhaps on the verge of doing so - Kier is in the top 10 quoted house builders in terms of sales.

Taylor Woodrow retains, for the time being, a small contracting arm but is really a house builder and with the market slowing that worries investors. In contrast, Kier is a contractor with fingers in enough pies to make the shares worth a punt.