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Kier gathers momentum

Kier set to benefit from the acquisition of Mouchel growing infrastructure spending.
September 18, 2015

Headline figures for construction and services group Kier (KIE) were masked by a number of one-off items totalling £32m, not least of which was the cost associated with the acquisition of infrastructure services group Mouchel, completed in June. Strip these out, and underlying operating profit was ahead by 19 per cent at £104m, and underlying earnings per share by 10 per cent at 96p.

IC TIP: Buy at 1439p

The combined entity is the leading operator in highway maintenance services, where spending in the UK will reach around £7bn this year, while Highways England has a £17bn five-year investment programme in the strategic road network.

On the construction side, underlying operating profit grew by 25 per cent to £37.7m, and the order book - on secure and probable work - jumped by a third to £3.3bn. Kier is also expanding its residential construction division, with underlying operating profit up 45 per cent at £11.2m. Completions rose by 35 per cent to 2,130, of which 1,400 were mixed tenure affordable units.

Analysts at broker Numis Securities forecast adjusted pre-tax profit for the year to June 2016 of £128m and EPS of 105.8p (from £85.9m and 95.6p in 2015).

KIER (KIE)
ORD PRICE:1,439pMARKET VALUE:£1.38bn
TOUCH:1,435-1,439p12-MONTH HIGH:1,520pLOW: 1,098p
DIVIDEND YIELD:3.8%PE RATIO:36
NET ASSET VALUE:610p**NET DEBT:24%

Year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p*)Dividend per share (p*)
20112.1272.513351.2
20122.9763.011452.8
20131.9425.95054.4
20142.9115.41657.6
20153.2839.54055.2
% change+13+156+148-4

Ex-div: 25 Sep

Payment: 27 Nov

*Prior years adjusted for 5-for-7 rights issue **Includes intangible assets of £777m, or 812p a share