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Kier upbeat on half year results

Kier has ruled out following the examples of larger peers Balfour Beatty and Carillion and hitting the acquisition trail.

Earlier this month Carillion completed its £561 million takeover of Alfred McAlpine while last year Balfour Beatty spent more than £50 million beefing up its regional business with the purchase of Bristol contractor Cowlin.

But Kier chief executive John Dodds said the company was not pursuing any particular firms.
He added: “We don’t need to buy any more contractors because we’re well established regionally and I think with support services you can end up paying quite a lot for not a lot.”

He admitted Balfour and Carillion were now fighting their own private battle for the title of Britain’s biggest builder but said of Carillion’s deal: “They paid a lot of money for McAlpine.” He added that the firm was receiving a number of CVs from disaffected McAlpine employees.

Around £1.4 billion of Kier’s expected £2.4 billion revenue this year will come from regional contracting and Mr Dodds said he was getting fed up with Kier being described as a house builder.

He said: “Housing building is about 25 per cent of profit before tax. By far the biggest profits contributors are construction and support services.”

Kier carries out a lot of its work through frameworks with public and private sector clients and Mr Dodds said this was holding up well. But he said speculative commercial developments were cooling and added: “They’re either being cancelled or not going as far as originally planned.”

Its house building business has been hit by negative market sentiment and the tightening by mortgage companies of who they lend money to.

Mr Dodds said it was still too difficult to tell whether interest rate cuts in December and earlier this month were having any impact on nervous buyers.

He added: “It’s too early to call the spring selling season. November, December and Christmas were dire but January was a little better. It’s very volatile.”

Despite the problems in housing, Kier’s pre-tax profits for the six months to December were up 23 per cent to £44.6 million.

Mr Dodds added: “They’re a strong set of results and we’re in good shape.” Turnover climbed 18 per cent to £1.2 billion.