Kier Construction upbeat after jump in profits

Kier Construction MD Brian McQuade. Picture: Contributed
Kier Construction MD Brian McQuade. Picture: Contributed
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Kier Construction, which boosted staff numbers in Scotland by a quarter during the past year, has reported a “buoyant” first-half performance as its parent group posted a surge in underlying profits.

The firm’s construction division saw a significant jump in revenue to £874 million during the six months to the end of December, up from £742m previously. It and Kier’s property business increased their operating profits, while the residential and services divisions traditionally perform better in the second half of the financial year.

In Scotland, Kier’s construction arm is working with the Hub South West public-private partnership on a £41m learning campus in Kilmarnock, as well as the new £25m Ayr Academy. It has also been appointed by Highland Council to build a joint-campus primary school and community centre in Fort William worth £10m.

New contracts are expected to flow from recent appointments to the Hub North and Hub East Central frameworks. Brian McQuade, managing director of the Scottish construction division, said the firm is well-positioned for the remainder of 2015.

“We are particularly pleased to have broken into the health and defence sectors over the past few months as a result of our appointment to both the NHS’s Health Facilities Scotland framework, and the Defence Infrastructure Organisation,” McQuade said.

“It is anticipated that both frameworks will contract work to partners within the frameworks to a value of £600m over the next five years.”

At group level, Kier’s pre-tax profits were down slightly at £35.9m, but this included the impact of acquisition, reorganisation and other one-off costs. On an underlying basis, profits surged from £6.3m to £26.7m on turnover that rose by 11 per cent to £1.58 billion.

Chief executive Haydn Mursell confirmed Kier is still in preliminary talks about possibly taking over infrastructure services group Mouchel. Those discussion have been going on since December. Any deal would follow the July 2013 acquisition of services specialist May Gurney, which Kier purchased for £221m.

“The property development pipeline sits at more than £1bn and we have a strong forward sales position in the residential division,” Mursell said. “The order books of the construction and services divisions have increased to £6.5bn with revenue now fully secured for 2015.

“With an improving market, we are seeing more and higher-quality opportunities filling our pipeline.”

Kier employs 166 people in Scotland, and is within weeks of opening a third Scottish office in Inverness to add to existing sites in Aberdeen and Glasgow. The company declared an interim dividend of 24p per share, an increase of 7 per cent.