A strong performance at Kier’s infrastructure and construction division saw profits rebound despite ongoing inflationary pressures in the market.

Pre-tax profit in the year to 30 June soared to £52m, up from £16m previously, after revenue grew 7.5% to £3.4bn.

The improved performance, which saw group margin increase to 3.9%, prompted Kier to announce it would be resuming dividend payments to shareholders in the year ahead.

Andrew Davies, chief executive, said: “The group has achieved considerable operational and financial progress over the last two years. This is reflected in the significantly improved financial performance of the group over the last year.

“Our order book remains strong at £10.1bn and provides us with good, multi-year revenue visibility.

“The contracts within our order book reflect the bidding discipline and risk management now embedded in the business.”

Around 85% of target revenue for the year ahead has now been secured providing Kier with a high degree of confidence of further progress against a backdrop of wider market uncertainty, said Davies.

He said that Kier had mitigated cost inflation pressure having 60% of its order book under target cost or cost reimbursable contracts.

Across the business operations construction profits improved driven by increased volumes and the impact of the prior year’s restructuring

The infrastructure division benefited from a continued ramp-up of Kier’s capital works on HS2.

Davies said the realignment of infrastructure service in July into two distinct business units – Transportation; and Natural Resources, Nuclear & Networks – would provide a stronger standing to pursue strategic market opportunities.

Kier trading by division

Op. profit
change
Revenue
change
Margin

Infrastructure
£57m
19%
£1.71bn
2.7%
4.7%

Construction
£46m
113%
£1.65bn
15%
4.2%

Property
£14m
-17%
£38m
-74%
34%

Despite better cash generation last year average month-end net debt rose to £232m from £216m in 2022.

Davies said the increase in average month-end net debt was due to the anticipated repayment of the Kier early payment system and lower activity in the construction business until the fourth quarter of the year.