Kier says confident on UK economy after profit rise
By Li-mei Hoang
LONDON (Reuters) - Support services and construction firm Kier Group said a recovery in the British economy should bring further growth after annual pretax profit more than doubled.
The company, whose activities range from building power stations to outsourcing work for local councils, said it believed economic confidence was returning to its core markets, particularly in property and construction.
"This year the stand out results are probably in our property division and construction, particularly in UK building (where) we are seeing a revenue increase getting on for 20 percent year-on-year," Chief Executive Haydn Mursell told Reuters.
"That's really for me the most tangible sign that the economy is recovering as people want bigger offices, confidence (is) rising and therefore our activity levels have responded accordingly."
Reported pretax profit for the year ended June 30 rose to 39.5 million pounds from 15.4 million pounds a year earlier. It posted underlying pretax profit of 85.9 million pounds, in line with expectations.
The accounting picture was complicated by a series of one-off charges and the impact of a share issue to help fund the 265 million pound purchase of road maintenance company Mouchel.
The dividend fell to 55.2 pence, from 57.6p a year earlier.
Shares in the company reversed initial gains to trade 4.3 percent lower at 1415 pence by 0845 GMT, making it one of the biggest fallers on the FTSE <.FTMC> mid-cap index.
"We are positive on Kier but suspect the stock will struggle today," said Whitman Howard analyst Stephen Rawlinson.
"Investors are likely to want a lower entry point and probably a cleaner set of numbers without the one-off costs relating to restructuring existing operations and the disposal of UK mining."
Kier posted a charge of 31.6 million pounds related to its acquisition of Mouchel, the closure of its pension scheme and the sale of Fleet & Passenger Services business. It also reported a 22.9 million pound charge for the disposal of its UK mining business.
Kier said the Mouchel deal represented a major step in accelerating its five-year strategy and would help it to secure more of the 17 billion pounds Britain is spending on its highways.
"Looking longer term, the infrastructure investment from the government means that we are seeing a huge pipeline, whether that is transport, new roads or power," Mursell said.
The company said its order book of 9.3 billion pounds was at a record level and that it had secured around 90 percent of work for the year ahead.
(Reporting by Li-mei Hoang; Editing by Keith Weir)
