Kier’s ‘hybrid model’ a financial success

Source: Construction Digital

Date :18/09/2008 12:32:03

Kier have announced preliminary pre-tax profits for the year to June.

Its business model has helped the company overcome the blow of its housebuilding division, moving into the red.

The building and civil engineering group's pre-tax profit, before exceptionals, for the 12 months to 30 June, was up 12.2 percent to £87 million.

Revenue for the whole group was up 11.6 percent also.

Profits were hit after bosses had to wipe £31 million off the value of Kier’s land bank, as well as incur £9.5 million in redundancy and reorganisation costs, as its housebuilding division fell into the red.

Chief Executive John Dodds said: “The benefits of operating a hybrid model have been particularly highlighted this year as the four principal legs of our business experience different market fundamentals.

“Continued demand in our construction and support services businesses has contrasted with the sudden and dramatic effect of the credit crunch on the demand for private housing and development properties.

“We have successfully extended our range of long-term contracting framework agreements, partnership programmes and negotiated repeat business both in the public and private sectors.

“These relationships contributed strongly to record combined forward order books for construction and support services, providing us with excellent visibility of revenue for a number of years.”