Andrew Davies’ Kier rescue mission pays off

From debt crisis to ‘government’s speed-dial contractor’ in six years – CN reflects on CEO’s legacy

The next two months will be big for Kier. The UK’s third-largest contractor reveals its 2025 results on 16 September, weeks before long-serving boss Andrew Davies departs. Stuart Togwell, group managing director of construction, will step up.

Davies (pictured) leaves after more than six years in charge, having joined the debt-ridden firm in March 2019 with a mission to turn its fortunes around. At the time, Kier was “a supertanker going the wrong way”, said Peel Hunt equity analyst Andrew Nussey, but Davies “turned it around 180 degrees”.

The chief executive arrived with the sector still reeling from the collapse of contracting giant Carillion in 2018. More crises were to follow: Covid, rampant material price inflation and recession. Davies took the strategic decision to focus on the government as a core client, meaning there was no place for Kier’s housebuilding arm and other non-core segments such as environmental services. After honing its public sector focus, the firm is now a “Premier League” contractor “on the government’s speed dial”, according to Nussey.

Kier’s transformation is evident by comparing its latest financials with 2019 (see table). The firm also drew £229.2m from a £670m revolving credit facility (RCF) in 2018-19 but began 2025 with a reduced £150m facility. And Kier has been confident enough to issue shareholder dividends for two years in a row, including £22.4m last year.

While Kier is now profitable, “the most impressive area of change is the stronger capital structure”, said Mani Singh, risk and surety adviser at Tryg Trade. “This includes five times as much cash and equivalents balance, less than one-third of the average monthly net debt […] and undrawn RCF.” He added: “I feel as though Davies’ strategy passed the tidying-up stage, progressed into the latter stages of the building-up stage and was beginning what looks to be a strengthening period.”

In a full-year trading update on 22 July, Kier said it expects to report “good growth” in its next results. About 88 per cent of targeted revenue for the 2026 financial year has already been secured. A focus on core sectors has been key, said Singh, adding: “Remember that it’s taken Kier five or six years to get to where it is now – it wasn’t simple, and that timespan helps to understand the scale of the original challenge.”

Asked to sum up Davies’ legacy, Nussey said: “He arrived with probably the toughest gig in the industry and is leaving [Kier] as a market leader set to play a key role in UK infrastructure – from water to highways, nuclear, prisons and rail – while leading in regional construction.”

He adds: “The point I make to investors is to look at Kier’s ability to pivot at pace to a particular market opportunity and take profitable market share. In the water sector, for example, Kier has skills across the group that have been brought together by Davies, whether that’s designers, a digital capability or modern methods of construction.”

While his exit is “undoubtedly a disappointing development” for investors, Nussey said, Togwell’s promotion suggests continuity.