Kier Group plc (LON:KIE), a leading infrastructure services, buildings and developments & housing group, announces its trading update covering the period since 20 September 2018, prior to its Annual General Meeting at 12 noon today.
Introduction
The Board is confident that the Group will meet its FY19 expectations, with the full-year results being weighted towards the second half of the financial year.
Future Proofing Kier (FPK) programme
Since its launch, the FPK programme has made good progress with respect to streamlining the business and improving cash generation.
As anticipated, the costs of implementing the FPK programme in the first half of the financial year are forecast to exceed the realised savings by approximately £10m. The full-year FY19 position is still expected to be earnings and cashflow neutral.
Disposal
On 15 November 2018, Kier agreed the terms of the disposal of its interest in KHSA Limited to Downer Group, the joint venture partner, for a total cash consideration of up to AUS$43.7m (c.£24m). The proceeds will service the reduction of the Group’s net debt.
Financial position
The Group continues to focus on operational cash generation and net debt reduction, anticipating average monthly net debt of approximately £390m for the first half of FY19, compared with approximately £410m for the second half of FY18. The level of net debt is increasingly a key focus for stakeholders in the industry and the Board recognises the importance of a strong balance sheet to take advantage of opportunities to underpin its future performance.
Outlook
The FPK programme positions Kier Group well for an improvement in profitability and cash generation, and its order books and development pipelines remain strong.
