Kier Group Boosts Profit, Targets Infrastructure over Property

Kier Group reported a 7.5% rise in revenue to £4.4 billion for fiscal 2026, alongside a 6.7% increase in adjusted operating profit to £170 million. The company’s adjusted earnings per share grew by 8.8%, reflecting a broader trend of revenue growth that has accumulated by one-third since 2022. Management stated that the business has transitioned from recovery to value creation, driven by the integration of divisions into a single infrastructure operation and enhanced digital capabilities.

The order book reached a record £11.9 billion, an 8.2% year-over-year increase as of June 30. This volume provides 95% revenue coverage for fiscal 2027, with the construction division holding 100% cover for the next twelve months. Kier attributed this growth to its positions across more than 120 frameworks, noting that over 90% of group revenue comes from repeat customers and nearly 90% of clients are public-sector or regulated entities.

Infrastructure Drives Margin Expansion

The infrastructure division saw revenue rise by 10% and adjusted operating profit increase by 16% during the fiscal year. Margins in this segment improved by 30 basis points to 5.5%, a result led by water-sector activity as the AMP8 investment cycle ramps up. Concurrently, rail work contributed to performance during the transition to Control Period 7, supporting the division’s overall profitability.

Construction revenue increased by 4% to nearly £2 billion, maintaining a 3.9% adjusted operating margin. The second half of the year benefited from the full delivery of the HMP Glasgow project. Regional construction operations were further supported by education and defense frameworks, which remain key components of the company’s project pipeline.

Cash Flow and Dividend Growth

Kier generated £206 million in operating free cash flow and £165 million in free cash flow for fiscal 2026. The closing cash position stood at £232 million at the end of June, a 14% year-over-year increase. The group recorded an average month-end net cash position of £11 million for the full year, marking the first time it has held an average net cash position since 2012.

The board approved a final dividend of 5.2 pence per share, increasing the full-year dividend to 7.8 pence. This payout reflects the improved financial position and the company’s commitment to returning capital to shareholders while maintaining a robust balance sheet.

Strategic Pivot to Core Infrastructure

Kier plans to run off its existing property development portfolio, expecting to release approximately £150 million in capital over three years. The company is targeting significant expansion in water, energy, defense, and healthcare sectors. Medium-term goals include achieving operating margins of 4% to 4.5%, cash conversion above 90%, and annual EPS growth exceeding 10%.

According to GN markets/earnings (en-US), the company expects fiscal 2027 adjusted earnings per share to be at the top end of its previous guidance. This outlook is supported by the record order book and the strategic focus on high-margin infrastructure projects, which align with the company’s long-term growth objectives.