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Kier profits rise, despite revenue fall

Contractor Kier has reported profits growth, despite declining reveues, with profits rising 20% to £31.9M for 2009, a healthy cash balance, and a rapidly filling order book in its interim results, published today.

As predicted by Kier’s next chief executive Paul Sheffield last week, the company has performed robustly in the recession.

Underlying profit before tax grew by 20.8% to £31.9M from £26.4M last year, and cash balances grew by £38.2M to £130.7M in the six months to 31 December 2009.

Total revenue for the six months to 31 December 2009 was £1,009.8M, down from £1,108.7M in the same period last year, driven by reductions in construction. Revenue in the construction business reduced by 14.6%, to £678.3M, from £794.2M in 2008, “Led by a reduction in private sector UK contracts together with a decline in our activities in Dubai and Romania.” Profits fell but margins increased.

Revenue in the support services business grew, rising 2.4% to £229.7M from £224.4M in 2008.

In construction, the company’s forward oder book has increased slightly to £2.2bn from £1.9bn in 2008. 73% of targeted revenue for 2010 they say is already secure or ‘probable’. Margins rose slightly to 2.5% for the first six months of the year, from 2.4% in the same period last year.

In support services, order books grew to £2.3bn from £1.8bn last year, and margins increasing by 10%, from 4% in 2008 to 4.4% in 2009.

Incumbent Chief Executive John Dodds said the group had “Continued to perform well and in line with expectations. We are delivering good profits with increasing net cash and our order books remain healthy supported by an extensive array of framework agreements and partnering arrangements.

“Our business continues to attract opportunities for our divisions both independently as well as cooperatively through our integrated business model. By working together our divisions create value and deliver holistic solutions that, I believe, truly set us apart from others.

“The uncertainties surrounding the forthcoming general election together with the public sector deficit give rise to concerns over the future levels of public sector spending. Notwithstanding that, our order book has grown and Kier is on over 50 construction framework agreements, both public and private, which provide comfort that we will grow our market share whilst delivering value to our clients,” he said.

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