Kier Group Reports Record Order Book and Cash Surplus

Kier Group reported a 7.5% increase in revenue to £4.4 billion for fiscal 2026, marking the third consecutive year of growth since 2022. Adjusted operating profit rose 6.7% to £170 million, maintaining a 3.9% operating margin. The company also recorded an 8.8% increase in adjusted earnings per share, signaling a shift from recovery to value creation. According to the report by GN markets/earnings (en-US), management attributes this performance to the integration of divisions and improved digital capabilities.

Chief Financial Officer Tom Hinton stated that the order book reached a record high of £11.9 billion as of June 30, up 8.2% year over year. This backlog provides 95% revenue cover for fiscal 2027, with the construction division holding 100% cover for the next 12 months. Kier noted that over 90% of group revenue comes from repeat customers, primarily public-sector bodies, with 95% of project revenue secured through cost-plus or two-stage contracts.

Infrastructure drives margin expansion

The infrastructure division saw revenue rise 10% and adjusted operating profit increase 16% in fiscal 2026. The division’s margin expanded by 30 basis points to 5.5%, driven by water-sector activity under the AMP8 investment cycle and rail work during the transition to Control Period 7. Meanwhile, construction revenue grew 4% to nearly £2 billion, maintaining a 3.9% margin. The second half benefited from the full delivery of HMP Glasgow, with education and defense frameworks supporting regional operations.

Balance sheet returns to net cash

Kier generated £206 million in operating free cash flow and £165 million in free cash flow for the year. The closing cash position reached £232 million, a 14% year-over-year increase. Notably, the group recorded an average month-end net cash position of £11 million, marking the first full year in net cash since 2012. This financial stability supports shareholder returns, including a final dividend of 5.2 pence per share and the completion of a £20 million buyback, with a second £25 million program underway.

Property division moves to run-off

The company announced it will cease new property investments, focusing instead on completing existing developments to return capital to the group. The property division generated £63 million in revenue and £9 million in adjusted operating profit in fiscal 2026. With planning secured for approximately 80% of projects, including 5,000 residential units, Kier expects to realize around £150 million in capital as assets come to market. This exit strategy aims to strengthen the core balance sheet and support double-digit earnings growth targets for fiscal 2027.