Kier Group plc

Kier reported group revenue of GBP 2.029 billion, up 2.6% year over year, and adjusted operating profit of GBP 71 million, up 6.6%, with an adjusted operating margin of 3.5%, up 10 basis points. Infrastructure Services revenue rose 4.9% to GBP 1.083 billion, Construction revenue was GBP 920 million, down 1.3%, and Infrastructure Services operating margin held at 4.5% while Construction margin held at 3.9%. Period-end net cash improved to GBP 103 million from GBP 58 million at December 2024, and average net cash was GBP 16.8 million versus average net debt of GBP 37.6 million in the prior period. Adjusting items were GBP 10.7 million in the half and are expected to be around GBP 30 million for FY26, with similar expenditure expected in FY27 and resolution by the end of FY28. The order book was a record GBP 11.6 billion, up 5% from June 2025, covering 94% of FY26 revenue and 78% of FY27 revenue. Management said full-year expectations remain unchanged and that the group is trading in line with Board expectations, with margin target range still 4% to 4.5% on a full-year basis.

Stuart Togwell framed the first half as evidence that Kier’s operating model is working, highlighting strong delivery, a record order book and improved cash generation. He spent much of his commentary on the company’s structural changes, including a stronger executive team, combining infrastructure capabilities, and pushing the Kier 360 approach that links fund, design, build and maintain work across divisions. His tone was confident and expansive, emphasizing long-term opportunities in water, defense, health, rail, and PPP-style models, while stressing that the company is positioned for sustainable growth.

Thomas Hinton focused on the numbers behind the improvement: revenue of GBP 2.029 billion, adjusted operating profit of GBP 71 million, operating margin of 3.5%, and net cash of GBP 103 million. He said average net cash of GBP 16.8 million was a milestone after years of reducing net debt-like items, and that cash generation should continue to build while the company returns cash through dividends and buybacks. He also outlined capital allocation priorities: dividend cover around 3x through the cycle, up to GBP 225 million of capital for Property to target 15% long-term ROCE, and a new GBP 25 million buyback after completing the prior GBP 20 million program. On costs, he said fire and cladding adjusting items were GBP 10.7 million in the half and expected to be around GBP 30 million for FY26, with similar levels in FY27.

Analysts pressed management on balance sheet strategy, building safety costs, defense and water exposure, modular construction, central costs, and whether Kier 360 could be broadened. On the balance sheet, management said they want to keep cash positive and continue strengthening the balance sheet, but did not give a target cash level; they also said they may look to refinance the bond in the next few weeks. On fire and cladding, Hinton said the estimate reflects project-by-project assessment and uncertain insurance recoveries, which is why the charge is recognized as liabilities crystallize. On growth areas, Togwell said defense, water, health, rail and PPP are real opportunities, while the CFO said modular construction may suppress revenue timing but could be positive for cash.