Profit down 40% after restructuring costs as firm appoints former Balfour Beatty regional boss as finance director
The impact of the integration of May Gurney saw pre-tax profit at contractor Kier fall by more than 40% in the year to June 2014, it reported today.
The contractor announced pre-tax profit of 拢14.8m after exceptional items, on revenue of 拢2.99bn, up more than 50%.
Kier also said Beverly Dew was set to join as finance director from Balfour Beatty, where he has been FD of the regional construction business since June 2013, after leaving Lend Lease where he had been since September 2008.
Kier said 鈥渦nderlying鈥� pre-tax profit at the group rose by 54% to 拢73.1m, reflecting the 拢222m purchase of May Gurney in June last year.
However, the group reported 拢42.2m of exceptional costs, which it said were due to 鈥渞estructuring, acquisitions and business closures鈥�, as well as the amortisation of contract right costs and the unwind of 鈥渇air value adjustments made on acquisition鈥�.
After this the profit of 拢14.8m represented a 43% fall from the 拢25.9m reported last year.
The construction business saw its operating profit increase 11% to 拢33.6m, with a slight reduction in its operating margin to 2.1% given the 22% rise in revenue to 拢1.6bn.
Kier chief executive Haydn Mursell said increased activity had seen some price inflation from increasing labour costs and commodity prices, but that these problems had been mitigated by the use of two stage bidding and its position on long-term framework contracts.
Mursell added that the recovering market meant Kier expected a 鈥渟teady stream of opportunities particularly in the health, education and defence sectors鈥� in the next year, but that it would nevertheless take 5-6 years for the construction division鈥檚 operating margin to repair to 2.5%.
Kier said the integration of May Gurney was 鈥渟ubstantially complete鈥� and on track to meet expected returns. Mursell said overall that it was a 鈥済ood鈥� set of results showing 鈥渟ignificant progress on last year鈥�.
He said: 鈥淒espite inflationary price and labour cost pressures in the market, our margins remained solid, particularly in our Services business. Following the integration of May Gurney, which transformed the scale and diversity of the Group, the breadth of our capabilities has resulted in new as well as larger contract awards.鈥�
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