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Kier reassures over Carillion contracts, debts and order book
Construction and services contractor Kier Group provided investors reassurance over its debt, order book and current contract performance, arresting the shares' recent plunge after the collapse of sector peer Carillion.
On 15 January, after Carillion was dramatically put into compulsory insolvency, Kier and Eiffage took over full responsibility for what had been the three-way joint venture to construct two sections of the HS2 rail project. Kier has also assumed full responsibility for the Highways England smart motorways schemes that had been a joint venture with Carillion.
"The above contracts are all performing well, operationally and financially," the FTSE 250-listed group said on Thursday as it gave an update on the half-year period to 31 December ahead of results in March.
Looking forward, chief executive Haydn Mursell said the group remained "on course to deliver double digit profit growth in the current year" and to achieve the targets set for growth out to 2020.
Net debt, scrutinised by investors in a new light since the demise of its rival, had grown in the half to £230-240m due to its acquisition of utilities specialist McNicholas. But debt is not only underpinned by property and residential assets of around £500m, but is also expected to fall below the level of group earnings before interest, tax, depreciation and amortisation by its 30 June year end, with the company assuring that average net debt will continue to reduce over the period to 2020.
Moving onto brighter issue, Kier was able to boast a combined construction and services order book of around £9.5bn, with a full 100% of forecast revenue for the 2018 financial year already secured.
Discussions are also underway Possible three-year extensions to two contracts with Highways England, with a final decision expected by the end of March.
McNicholas, which was acquired last July to make Kier a top-three player in the utilities engineering sector, was said to be performing well.
Mursell said: "Our first half performance continues to demonstrate the strength and stability of the business and the benefits of our client focused strategy.
"We have leading market positions in infrastructure services, building and development which provide the platform to support further growth and position the group well for the future."