Kier in line for year despite sluggish construction

Construction, services and property group Kier said it remains on course to meet full year expectations as it builds momentum towards the second half of the year.

Trading at its construction division has remained stable, despite a challenging market, and has secured over £400m of new work since July 1st 2012. Operating margins will remain in line with expectations for this financial year.

However the engineering giant cautioned that the trading environment remains difficult with little sign of improvement in the UK construction market. "In light of this we are conducting a further review of our construction operations to ensure we remain as efficient as possible," it confirmed in a group statement.

Elsewhere its services division is trading in line with company expectations and has secured new work in excess of £200m during the period, underpinning its £2.1bn order book.

"This provides visibility of revenues beyond 2020, with 95% of forecast services revenue for the year to June 30th 2013 secured or probable," Kier explained.

The group's property division is trading in line with expectations, with transactions weighted towards the second half. Its private housing business remains on track to deliver more than 500 completions this year.

"With our healthy order books and solid balance sheet, combined with our integrated, well-balanced business model, our trading performance will be in line with our expectations for the current financial year," the group affirmed.

"We are experiencing a good level of bidding activity across the group."

Kier's net cash position at December 31st 2012 is expected to have reduced by around £100m from June 30th 2012 as forecast.

"This is primarily a result of the timing of the property division's investments including the £30m of deferred consideration paid to Lloyds Banking Group in October 2012. Property transactions scheduled for the second half of the financial year will supplement cash inflows across the group's other divisions, so we anticipate the group's net cash position to return to levels similar to June 30th 2012 by the end of this financial year," it said.

However, it expects the working capital environment in construction will continue to remain challenging.

CJ