12th Sep 2013 08:51
LONDON (Alliance News) - Kier Group PLC Thursday reported a decline in profits and revenue for the full year, but remained optimistic that the business would recovery following the GBP221 million acquisition of rival May Gurney in July.
The construction giant posted pretax profit of GBP43.0 million for the year ended 30 June, down from GBP63.0 million a year earlier. Kier said this decline reflected the tough trading conditions the industry had faced during the year.
Kier said it's banking on the acquisition of May Gurney to boost its results after revenue fell to GBP1.98 billion, from GBP2.07 billion in 2012.
"The integration of the business [May Gurney] is going well and we do expect to achieve the synergies that we highlighted when bought the business, which was GBP5 million this year, GBP15 million next year and thereafter GBP20 million," Chief Executive Paul Sheffield said in a telephone interview, referring to the cumulative increase in cost savings to a total of GBP20 million.
"The revenue synergies that [the acquisition] is likely to generate for us are very significant and we are already seeing a number of tender opportunities that neither of us would have been able to approach before, but now that we have combined with have a great opportunity to win them," Sheffield said.
Revenue for the company's biggest divisions construction fell to GBP1.30 billion from GBP1.38 billion a year earlier, attributed to poor weather which caused delays, pushing revenues into the 2014 financial year.
The company's smaller divisions, services and property, also struggled to outperform last years' results.
However, Sheffield remained optimistic and said the company had won big contracts for next year.
"Our construction business has got all of its expected work for 2014 and we have been successful in wining work in healthcare, education and major infrastructure scheme, which is very positive," Sheffield added.
"The amount of visibility that we've got of the work coming through is quite strong, with a huge amount of infrastructure work coming through, so it gives us confidence that volumes are going to pick up from what has been a five year decline."
The company's net cash remained "solid" at GBP60 million, after it invested GBP77 million during the year, while earnings per share declined to 136.2 pence, from 156.8 pence.
Following the acquisition of May Gurney, Kier appointed Steve Bowcott as chief operating officer "to strengthen and integrate its operating processes across the enlarged group and ensure that they are implemented in a cohesive and consistent way".
The board said it was "confident in the business "and declared a 3.0% increase in full year dividend to 68 pence, from 66 pence.
Kier shares were trading at 1,646.38 pence Thursday morning, down 20.62p, or 1.2%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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