Firm on course to correct net debt position in matter of years, says chief
Kier shareholders will receive their first dividend in five years next March when the contractor announces details of the payment in its interim results.
It will be the first such payment chief executive Andrew Davies has overseen since he arrived at the firm in April 2019, a year after he was supposed to start work as Carillion鈥檚 chief executive before that firm collapsed at the beginning of 2018.
In its 2023 annual results, Kier said the dividend payment was part of a medium-term business plan which includes growing revenue to between 拢4bn and 拢4.5bn. Davies said: 鈥淲e鈥檝e worked incredibly hard to get to where we are.鈥�
The firm鈥檚 average month end net debt for the year to June was 拢232m but Davies said he 鈥渃ould see a line of sight where we get to an average net cash position鈥�.
He declined to put a timetable on this, but it is expected to be within the next couple of years.
At its height, average month-end net debt was 拢432m in 2021 with the firm also hobbled by covid loan and KEPS repayments which swelled the figure to 拢582m.
The annual results showed growth in revenue and profit, with the former up 7.5% to 拢3.4bn.
Statutory pre-tax profit in the year to 30 June 2023 hit 拢51.9m, up from the 拢15.9m recorded the year prior 鈥� however, the firm鈥檚 adjusted figures showed significantly lower pre-tax profit growth.
Earlier this month, Kier kicked off the break-up of collapsed contractor Buckingham by picking up its rail division, which includes its jobs for Network Rail and HS2, for 拢9.6m.
Davies said the rail business was the only part of Buckingham 鈥� which is better known as a stadium builder 鈥� that the firm had been interested in.
The deal came with 15 live projects and is forecast to add between 拢50m and 拢75m additional revenue to Kier鈥檚 transport arm.
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Transport schemes have been particularly affected by the high inflation of the past years, with major jobs such as HS2 experiencing cuts to their scope.
But Davies said such moves, which include the mothballing of the new Euston station site in north London, have not affected Kier.
鈥淗S2 are always looking to optimise the programme,鈥� he said. 鈥淢othballing [Euston] has had no impact.鈥�
He added that the firm鈥檚 pipeline of work remained strong and that clients were now much more realistic about costs than they were a year ago.
鈥淐lients are working to a very realistic cost estimate now,鈥� he said. 鈥淚t鈥檚 more straightforward than a year ago. We鈥檙e not getting to a two-stage tender with unrealistic cost estimates.鈥�
Davies said inflation was 鈥渟till an issue鈥� but that it was 鈥渕anaged better鈥� and that inflationary pressure in the system was 鈥渘othing like it was 18 months ago鈥�.
Back then, he said, 鈥渢he pace of inflationary pressures meant costs were out of date鈥� when it came to concluding deals, resulting in jobs getting delayed.
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