Kier Construction Scotland helps deliver ‘solid’ results for parent group

The ongoing success of Kier Construction Scotland has contributed to an underlying growth in both profits and revenue in the first half for its parent company Kier Group.

Announcing its results for the six month period ended 31 December 2017, Kier said it remains on course to deliver double-digit profit growth this year and hit its 2020 strategic targets, despite being hit by delayed project starts towards the end of last year.

The group reported an 8% increase in revenue to £2,154 million, while underlying operating profit of £60m was up 5%.

Kier Construction Scotland, which employs over 200 people from its offices including Glasgow, Aberdeen and Inverness, has maintained turnover stability at approximately £150m per annum and is gearing up for the future growth target of £200m by 2020.

Brian McQuade

Brian McQuade, managing director of Kier Construction Scotland, said: “Kier Construction Scotland has a robust pipeline of activity, thanks to a number of important framework and tender wins. We have secured a place on fourteen national frameworks across Scotland and this includes our most recent appointment as Tier One contractor to hub West, where we will deliver a range of public sector capital works projects throughout west central Scotland. We are also a principal supply chain partner under Frameworks Scotland 2 to build a £34.5m elective care facility at Golden Jubilee National Hospital in Clydebank.

“We have added to our strong education portfolio with a number of contract wins, including our appointment by the University of Edinburgh to carry out the £7.7m transformation of Murchison House into a dynamic, multi-functional teaching and study hub, and our appointment to the University of Strathclyde’s £250m Framework for Major Building Construction to support the delivery of its ongoing Capital Investment Plan.

“Our unique expertise in the heritage sector continues to flourish as we have been appointed as the contractor to support Glasgow Life in their £66m refurbishment of one of Scotland’s national treasures - The Burrell Collection. This is an exciting addition to the work we are currently carrying out in this specialist area, including the restoration of the Mackintosh Building for Glasgow School of Art and the refurbishment of listed buildings at Edinburgh College of Art and Aberdeen Music Hall.

“While these fascinating projects bring the chance to attract new talent and hone expert skills, the sector is battling against a skills shortage, made worse by an outdated perception of the construction industry. To help combat this, Kier has pledged one percent of our workforce as part of our Shaping Your World campaign to act as school career ambassadors in a bid to highlight the breadth of diverse career opportunities in construction and the significant boost that the sector delivers to the economy.”

Kier’s Property division performed ahead of its 15% ROCE target while the Residential division’s return on capital is progressing towards its 15% target as the mixed tenure housing business matures.

Revenue in the Construction division decreased by 7%, mainly as a result of delays in the commencement of certain projects to the second half of the financial year. Although the Construction division’s margins declined from 2.0% to 1.8% during the period, principally as a result of the effects of the final costs of closing the Caribbean and Hong Kong businesses (£7.7m), Kier said it expects that margins will increase in the second half of the financial year.

Haydn Mursell, chief executive, said: “The Group is performing well. Our £9.5bn Construction and Services order book, combined with our £3.5bn pipeline in the Property and Residential divisions, provides good visibility of work over the medium term.

“The Group’s performance reflects the strength of our business model and our financial and operational disciplines. Our portfolio of businesses provides balance and resilience and our approach to risk management is evident in the margin performance we have delivered over many years. We remain on course to deliver double-digit profit growth in 2018 and to achieve our Vision 2020 strategic targets.”

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