Kier Group PLC (LSE:KIE) has said it achieved a “strong financial performance” in the year to end-June 2022, despite ongoing cost inflation, with operating profits growing by 20% and its order book climbing 27%.
The profits rise came although revenue in the 12 months to June 30, 2022, was flat at £3.3bn, reflecting an anticipated drop in volumes in the construction division, the infrastructure services, construction and property group said.
However, adjusted operating profit came in at £121mln, an increase of 20% on the prior year, with a good performance from all three divisions - infrastructure services, construction and property.
The adjusted operating profit margin increased to 3.7% from 3%, beating the company’s medium-term target of 3.5%.
The group said it managed to mitigate against increased cost inflation relating to materials, wages and other costs through having around 60% of its order book under target cost or cost reimbursable contracts.
The order book grew by 27% to £9.8bn, “providing certainty against the wider market backdrop”, Kier said.
It noted that visibility is “good” with 85% of expected revenue for the current year secured.
"Over the last two years Kier has undergone a transformation, rationalisation and recapitalisation and the group is delivering against its medium-term value creation plan,” the company's chief executive Andrew Davies said in a statement. "The performance over the last 12 months reflects our significantly enhanced resilience and strengthened financial position.”
Looking ahead, Davies said the company is well positioned to continue benefiting from UK government infrastructure spending commitments.
“The new financial year has started well and we are trading in line with our expectations, despite continued inflationary pressure and see no change in the current market outlook,” he added.
Net cash at end-June 2022 was unchanged at £3mln, while average month-end net debt reduced to £216mln from £432mln.