Kier Group shares tumble despite record orders
Kier Group shares tumbled this morning despite the firm hiking dividends by a fifth and reporting a record £11bn order backlog.
The London-listed group said it would pay investors an interim dividend of 2p, up 20 per cent from last year’s 1.67p.
Kier Group’s record £11bn order book rose two per cent year-on-year and means it has secured 98 per cent of its full-year revenue to date.
But shares fell more than ten per cent in early deals despite some analysts predicting the stock would rise.
On an adjusted basis, half-year operating profit increased three per cent to £66.6m, while revenue rose five per cent to £1.98bn.
“These developments are testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our financial position,” Andrew Davies, chief executive, said in a statement.
Davies told shareholders Kier was trading in-line with the Board’s expectations, following a solid start to the year.
“The group is confident in sustaining the strong cash generation achieved over the last few years and is well positioned to continue benefiting from UK Government infrastructure spending commitments.
He added: “Kier operates in markets which are vital to the UK. We remain committed to delivering our long-term sustainable growth plan which will benefit all stakeholders.”
Kier Group also managed to whittle away at its debt pile, reducing its average month-end net debt by 72 per cent to £37.6m.
Shares have struggled this year to date, though, and are down 4.8 per cent amid political and economic uncertainty.
Kier said it was “well placed” to benefit from the UK government’s increasing spending in infrastructure, with around 91 per cent of its contracts in the public sector.
“We believe UK infrastructure spending commitments are driven by structural demand which have a positive influence on Kier’s chosen markets,” the company said in a statement to markets.
“Population growth, transportation pressures, aged infrastructure, energy security and climate change are significant drivers of structural growth in the markets in which we operate.”