Kier Group (KIE) H2 2024 earnings summary

Executive summary

• Achieved strong FY 2024 results with revenue up 17% to £4 billion, improved profitability, and robust cash generation, enabling significant deleveraging.

• Order book increased 7% year-over-year to £10.8 billion, providing multi-year revenue visibility with over 90% of FY 2025 revenue secured.

• Successfully acquired Buckingham Group's rail assets and refinanced the group, strengthening financial position.

• Proposed final dividend of 3.48p per share, total 5.15p for FY 2024, with earnings cover of four times, targeting three times in FY 2025.

• Announced a new long-term sustainable growth plan after delivering on the FY21 medium-term value creation plan.

Financial highlights

• Revenue grew 17% year-over-year to £3,969.4 million, driven by infrastructure services (+16%) and construction (+15%).

• Adjusted operating profit rose to £150.2 million (3.8% margin); statutory profit before tax increased 31% year-over-year.

• Adjusted EPS up 7% to 20.6p despite higher tax rates.

• Net cash improved to £167.2 million from £64 million in FY 2023; average month-end net debt halved to £116 million.

• Operating cash conversion improved to 145%, with free cash flow at £185.9 million.

Outlook and guidance

• Targeting revenue growth above UK GDP, adjusted operating margin above 3.5%, and cash flow conversion of at least 90%.

• Sustainable average net cash position targeted, with surplus cash to be invested.

• Dividend policy aims for three times earnings cover through the cycle.

• Confident in sustaining strong cash generation and benefiting from UK infrastructure spending commitments.

• FY25 started well, with trading in line with expectations and c.90% of revenue already secured.