Infrastructure services-to-construction company Kier (LON:KIE) was in demand after delivering an upbeat FY26 trading update.
The FTSE 250 firm now expects sales and profits for the year to June 2026 to be ‘at the top end’ of market expectations.
Kier also called attention to a bulging order book providing ‘a high degree of visibility’ for the company.
Positive momentum persists
Kier said the strong trading momentum experienced in H1 persisted into H2. As a result, the Manchester-based firm sees FY26 revenue and profit at the top end of market expectations.
In the infrastructure division, H2 benefited from ongoing strong growth in water projects, along with ‘good momentum’ in the highways and rail businesses.
Meanwhile, the construction division has seen the ramp-up of significant projects. While the property business saw an increase in activity, transaction timings were delayed by ‘wider macroeconomic turbulence’.
Orders in the bag
Kier reported a year-end order book worth £11.9 billion, 8% higher year-on-year. This order book represents over 90% of forecast FY27 revenue and provides a ‘high degree of visibility over near and medium term trading’.
In H2, Kier secured around £1.5 billion of new business in infrastructure across core markets, such as nuclear, water and environment.
The company also bagged £1 billion of new construction with public and private sector clients. These spanned diverse end markets such as education, justice, healthcare and defence.
What did the CEO say?
CEO Stuart Togwell said Kier’s bumper order book continues to provide ‘excellent revenue visibility, comprising substantial high quality opportunities across critical UK infrastructure’.
Togwell added: ‘This success highlights the strength of our market positions, combined with the quality of our end to end capabilities, which provide a compelling platform for continued growth.’
Typically, we aren’t big fans of low margin businesses such as Kier. However, the firm has positive earnings momentum at its heels and further upgrades could follow.
A bulging order book provides good revenue visibility and should support earnings in a tough economic backdrop.
Kier is leveraged to structurally supported UK infrastructure markets where spend is long-term, regulated or politically prioritised is reassuring. Roughly 90% of its revenue is generated from public sector and regulated clients.
The company guided for a year-end net cash position of more than £232 million, a 14% increase year-on-year. A forward price-to-earnings ratio of 10 times looks undemanding and Kier also offers a decent 3.5% yield. On balance, we think the shares are worth a look.
Read the press release here: https://www.kier.co.uk/investors/
