AUS
NZ
UK
CA
USA
IND
Summary
- Kier Group PLC had a robust order book of £8.0 billion as of 31 December 2020.
- KIE had a net debt of £353.5 million as of 31 December 2020.
- KIE had sold its housebuilding business, Kier Living, to Foster BidCo Limited for the total cash consideration of £110 million.
Kier Group PLC (LON:KIE) is the LSE listed construction stock. KIE’s shares have generated a return of around 12.95% in the last 12 months. The Company is a constituent of the FTSE All-Share index.
Company Overview
Kier Group PLC is a Bedfordshire, United Kingdom-based leading infrastructure and construction services company. The operations are differentiated into four operating segments, namely Property, Residential, Construction and Services. Moreover, KIE had delivered more than 200 healthcare projects in the last ten years. Furthermore, KIE has a strong customer relationship with the UK government and regulated bodies.
(Source: Company presentation)
A brief about Construction Equipment industry
With reference to the recent report from Grand View Research, the market size of the global construction equipment industry was USD 124.7 billion in 2019, and it would expect to grow at a CAGR of 4.3% from 2020 to 2027. The increased levels of investments by various governments towards the enhancement of public infrastructure would boost the construction equipment industry in the near term. Moreover, the rising population in emerging economies would also boost up commercial construction activities.
Recent Developments
Sale of Kier Living - On 16 April 2021, KIE announced that it had entered into an agreement regarding the cash sale of Kier Living to Foster BidCo Limited for the total consideration of £110 million. Moreover, this transaction would strengthen the balance sheet and aligned with the KIE’s strategy to simplify the business model.
Financial Highlights (for six months ended 31 December 2020, as of 21 April 2021)
(Source: Company result)
KIE had reported around a 13% drop in revenue to £1,624 million during H1 FY21 as the business performance was adversely impacted due to the management actions taken to simplify the business model by exiting the loss-making contracts. Moreover, the Company had a robust order book of £8.0 billion as of 31 December 2020 due to a successful track record of project delivery as KIE had a reputation as the largest Government suppliers. On the profitability front, the adjusted operating profit grew by around 1.9% to £47.6 million during H1 FY21. The operating margin rose by 40 basis points to 2.9%, driven by efficient cost management. The Company had a net debt of £353.5 million as of 31 December 2020.
Share Price Performance Analysis of Kier Group PLC
(Source: EODHD/Others, Thomson Reuters)
KIE shares were trading at GBX 92.61 and were down by close to 1.70% as of 21 April 2021 at 12:38 PM GMT. KIE’s 52-week Low and High were GBX 42.06 and GBX 111.13, respectively. Kier Group PLC had a market capitalization of around £152.88 million.
Business Outlook
The Company would be expected to benefit from commitments of the UK Government’s expenditure through an established framework. Moreover, the stringent management actions and efficient cost management had resulted in improved business performance during H1 FY21. KIE had anticipated delivering revenue ranging from £4.0 billion to £4.5 billion over the medium term. Also, the adjusted operating profit margin was expected to remain around 3.5%, and the cash conversion of operating profit to remain approximately 90% from the medium-term perspective. Furthermore, the transaction involving the divestment of the Kier Group would be expected to complete before mid-June 2021. Overall, the Company had delivered significant strategic and financial progress and remained well-positioned for long-term growth.
(Source: Company presentation)
