Costs associated with the acquisition of May Gurney last July left headline interim figures with little comparative relevance for construction group Kier (KIE). After taking into account £22m of exceptional charges, amortisation and other adjustments, underlying pre-tax profits jumped 90 per cent to £36.8m. Given the chilly operating climate, Kier did well to maintain service margins at 4.3 per cent and push construction margins up from 2.1 per cent to 2.3 per cent.
The May Gurney acquisition has transformed the services division, which includes housing and highways maintenance and facilities management, more than doubling revenue to £563m and boosting the order book by 77 per cent to £3.58bn. Organic growth was more modest, but even excluding May Gurney operating profits were up by 15 per cent. Construction work was boosted by significant new business awarded through existing framework agreements, notably on affordable housing and healthcare.
Prospects for the current year suggest the positive effects of an improvement in the economic climate are starting to show through, with virtually all targeted revenue already either secured or probable. Analysts at Numis are forecasting full-year pre-tax profits of £73m and EPS of 103p (from £46.3m/92.9p in 2013).
| KIER (KIE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,796p | MARKET VALUE: | £ 991m | |
| TOUCH: | 1,796-1,804p | 12-MONTH HIGH: | 1,943p | LOW: 1,129p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 570p* | NET DEBT: | 43% | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.98 | 12.5 | 25.1 | 21.5 |
| 2013 | 1.43 | 6.3 | 7.6 | 22.5 |
| % change | +46 | -50 | -70 | +5 |
Ex-div:05 Mar Payment:16 May | ||||
