Kier Group (LON:KIE) reported higher revenue, profit and cash generation for fiscal 2026, while outlining a strategy centered on infrastructure and construction growth, further balance-sheet strengthening and double-digit earnings-per-share growth.
The company said revenue rose 7.5% to £4.4 billion during the year, extending a period in which revenue has increased by one-third since 2022. Adjusted operating profit increased 6.7% to £170 million, with the adjusted operating margin holding at 3.9%. Adjusted earnings per share rose 8.8%.
Order Book Reaches Record Level
Chief Financial Officer Tom Hinton said Kier’s order book rose 8.2% year over year to a record £11.9 billion as of June 30. The company attributed the increase to its positions across more than 120 frameworks.
The order book provides 95% revenue cover for fiscal 2027, Hinton said, while the construction business has 100% cover for the next 12 months. Kier also has about £2 billion of work in one-to-one customer discussions that it expects to join the order book.
More than 90% of group revenue comes from repeat customers, according to the company. Kier said 95% of project revenue is covered by either cost-plus contracts or two-stage contracts, while nearly 90% of customers are public-sector bodies or regulated entities.
Infrastructure revenue rose 10% in fiscal 2026, while adjusted operating profit in the division increased 16%. The division’s margin rose 30 basis points to 5.5%, led by water-sector activity as the AMP8 investment cycle ramps up, alongside rail work during the transition to Control Period 7.
Construction revenue increased 4% to nearly £2 billion, maintaining a 3.9% margin. Kier said the second half benefited from HMP Glasgow moving into full delivery. The company cited education and defense frameworks as important to its regional construction operations.
Cash Position and Shareholder Returns
Kier generated £206 million of operating free cash flow and £165 million of free cash flow in fiscal 2026. Its closing cash position was £232 million at June 30, up 14% year over year.
The group recorded average month-end net cash of £11 million for the full year, compared with an average net debt position in fiscal 2025. Hinton said it was Kier’s first full-year average net cash position since 2012.
The board approved a final dividend of 5.2 pence per share, bringing the full-year dividend to 7.8 pence, up 8.3% from the prior year. During the year, Kier completed a £20 million share buyback and began a second £25 million program in March. The company expects the latter program to be completed by the end of calendar 2026.
Hinton said future buyback timing would depend on cash generation in the core business, capital released from the property portfolio and the pace of balance-sheet strengthening. He said the company would not seek to repay its £250 million bond early, noting that repayment from March 2028 would be a logical timing.
Property Business to Be Run Off
Kier said it will no longer invest in new property developments. Instead, it plans to complete existing developments and return capital to the group balance sheet as projects come to market.
The property division generated £63 million of revenue, £9 million of adjusted operating profit and a 4.3% return on capital employed in fiscal 2026, amid what the company described as a subdued market. Kier said planning had been secured on about 80% of projects, including approximately 5,000 residential units.
The company expects capital employed in property to peak in December, then anticipates realizing approximately £150 million of capital over the following three years. Kier said the proceeds would initially be used to strengthen the balance sheet and would reduce the impact of more volatile, transaction-led property earnings over time.
Medium-Term Growth Targets
Kier set out targets for mid-single-digit annual revenue growth, an adjusted operating margin of 4% to 4.5%, cash conversion above 90% and earnings-per-share growth of more than 10% on a compound annual basis over the medium term.
The company is targeting average net cash of more than £200 million by fiscal 2029. Hinton said Kier expects cumulative operating free cash flow of £600 million to £700 million from fiscal 2027 through fiscal 2029, alongside about £150 million of net capital realization from property. After cash taxes, interest and remaining fire and cladding costs, the company expects total allocatable capital of £600 million to £700 million.
Kier said its priorities for capital deployment after core capital expenditure and ordinary dividends are balance-sheet strengthening, selective value-accretive acquisitions and potential additional share buybacks.
- Water revenue is targeted to double from £400 million to £800 million by 2029.
- Energy revenue is targeted to rise from £170 million to £400 million.
- Defense revenue is targeted to increase from £150 million to £350 million.
- Healthcare revenue is targeted to grow from £170 million to £250 million.
The company said these four sectors could provide about £1 billion of revenue uplift over the next several years. Kier cited access to around £200 billion of frameworks, as well as its national delivery capacity, regional presence, design capability and facilities-management operations, as differentiators in pursuing the opportunity.
During the analyst question-and-answer session, management said water is a strong-margin business but sits in the middle of the infrastructure division’s margin range. Kier also said fiscal 2028 revenue cover stands at about 70%, while fiscal 2029 coverage is in the early 50% range, before considering longer-term pipeline opportunities.
About Kier Group (LON:KIE)
Kier Group is a leading infrastructure services, construction and property group based in the UK.
Our purpose is to sustainably deliver infrastructure which is vital to the UK with a vision is to be the UK’s leading infrastructure services and construction company.
We operate through three segments; Infrastructure Services, Construction and Property. Infrastructure Services comprises our Transportation and Natural Resources, Nuclear and Networks business. Transportation: builds and maintains roads for National Highways and a number of district and county councils as well as our rail, airports’ infrastructure and ports’ businesses.
Natural Resources, Nuclear and Networks: delivers long-term contracts providing repairs, maintains and support capital projects to the water, energy, and telecommunications sectors.
Construction — comprises of our Regional Building, Strategic Projects, Kier Places (Housing Maintenance and Facilities Management), and International businesses.
