Kier sees opportunities in public spending cuts

Kier reckons that its size and reputation will mean a larger slice of the infrastructure cake ahead of smaller competitors when the likely return to public-private partnerships and new version of PFI emerge.

With the chancellor facing challenges to balance the books, especially with new commitments to increased defence spending, cuts to public spending on infrastructure in the forthcoming spring statement from the Treasury are to be expected. The chancellor has already commissioned work on exploring private financing options for the £9bn Lower Thames Crossing.

Reporting its interim results today, Kier so no reason to despair at this prospect.

“Given that public funding may be insufficient to maintain public assets, customer behaviours are shifting further towards long-term partnerships. These continue to favour Kier, given our scale, integrated design and project management capability, track record of delivery and environment, social and governance (ESG) credentials,” the company said.

And with population growth, transportation pressures, crumbling infrastructure and the need for clean energy security, the demand is there.

“These positive structural demand trends and customer behaviours are expected to expand our addressable market opportunities, particularly in water, environment, energy and affordable housing, as well as supporting increased demand in our property business,” Kier said.

For the six months to 31^st December 2024 Kier generated revenue of £1.979m, up 5% on the previous year, and grew pre-tax profit by 6% to £28.6m (2023: £27.0m).

Chief executive Andrew Davies said: “The group has continued to make significant operational and financial progress. The first half saw Kier deliver increased revenue and profitable growth whilst maintaining strong margins. We continued to grow the order book which, at £11bn, provides us with good multi-year visibility.”

He added: “The second half of the financial year has started well, and we are trading in-line with the board’s expectations. 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. Kier operates in markets which are vital to the UK.”

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