Kier has reported a 50% increase in turnover in its first full year results since the takeover of May Gurney last year.
For the year to June 2014, Kier posted record revenue of £3bn, up from £2bn a year ago.
However, pre-tax profit dropped to £14.8M, from £25.9M the previous year, chiefly due to £58.3M of one-off costs relating to the May Gurney acquisition and restructuring.
Underlying operating profit rose 59% from £55.5M to £88.0M.
Kier’s construction division made revenues of £1.6bn for the year, up 22% from £1.3bn in 2013, and operating profit rose 11% to £33.6m. The operating margin was 2.1%, down on the previous year’s 2.3%. The business comprises the building, major projects, infrastructure, and international operations.
The services business, which has grown the most following the May Gurney purchase, posted turnover of £1.1bn, up from £437M, while operating profit rose to £53M from £19M. The division includes highways maintenance, utilities, facilities management, housing maintenance and environmental services.
Housing accounted for revenue of £284M (2013: £238M) and operating profit of £21M (2013: £20.5M).
The forward order for services accounts is £3.7bn while construction stands at £2.5bn.
New chief executive Haydn Mursell (pictured), who took over in July 2014, said: “The results that show significant progress on last year and demonstrate the strength of the operational performance of the business and the benefits of the May Gurney acquisition.
“Despite inflationary price and labour cost pressures in the market, our margins remained solid, particularly in our services business. Following the integration of May Gurney, which transformed the scale and diversity of the group, the breadth of our capabilities has resulted in new as well as larger contract awards. Our capabilities extend from negotiating finance and planning permissions to constructing major buildings and infrastructure, as well as providing facilities management and environmental services. This breath of capabilities puts us in a good position to pursue future growth.”
“While the economic climate continues to be positive, operating margins are under pressure due to inflationary cost increases in the supply chain. Cash generation will continue to be constrained in the short-term. However, strong risk management and our ability to offer a greater range of service offerings positions us well for the future.”