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Kier faces uphill battle

The embattled contractor suffered another statutory pre-tax loss in 2019
March 5, 2020

Kier (KIE) remained in the red in the first half of the 2020 financial year as statutory earnings were weighed down by £71m in exceptional charges. These included £49m in restructuring costs as the group trimmed headcount and implemented its turnaround plan. On an adjusted basis, pre-tax profit was flat at £30.7m.

IC TIP: Sell at 121p

Amid the wider slowdown last year, adjusted operating profit from Kier’s construction activities dropped more than a fifth to £28.8m. In infrastructure services, the highways business continued to suffer from volume pressures and a shift away from maintenance to lower-margin capital projects. With the margin squeezed by 1.1 percentage points to 3.5 per cent, infrastructure adjusted operating profit plunged by almost a third to £27.6m.

The planned disposal of its housebuilding business, Kier Living, would help address net debt, but a sale has yet to go through. Excluding £188m in lease liabilities, net debt jumped 45 per cent since the 2019 year-end to £242m, although average month-end net debt was £27m less at £395m.

Broker Liberum forecasts adjusted pre-tax profit of £76.8m and EPS of 37.6p in 2020, rising to £80.1m and 38.9p in 2021.

KIER (KIE)     
ORD PRICE:121pMARKET VALUE:£196m  
TOUCH:121-122p12-MONTH HIGH:532pLOW:58p
DIVIDEND YIELD:nilPE RATIO:na  
NET ASSET VALUE:239p*NET DEBT:108%**  
Half-year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p) 
2018***2.04-45.3-38.44.90 
20191.87-41.2-22.1nil 
% change-8--- 
Ex Div:na    
Payment:na    
*Includes intangible assets of £742m, or 459p a share
**Includes lease liabilities of £176m
***Restated