Kier reports a 26% rise in profit as housing and support services expand at expense of less-profitable construction division.

Multi-disciplinary group Kier has increased its pre-tax preliminary profit by 26.3% to £43.2m for the year ended 30 June. Dividends also increased from 16.4p to 19p.

Turnover remained static at £1.476bn despite substantial growth in the support services and housing divisions. This was due to a planned reduction in the amount of work taken on by the construction division.

Kier said that it performed strongly in all its market segments. John Dodds, chief executive said: “All of our operating companies have had a tremendous year, which had lead to this record result.

“The quality of our projects in the pipeline, solid order books and the strength of the management teams puts us in an excellent position to deliver another strong performance next year.”

The group said that the order book in its construction and services division stood at £1.75bn. It said that the risk profile of this business had improved in recent years because of better contract terms and more focused activities.

Kier said its support services division provided £174.3m of turnover an increase of 51% over the previous year.

It has been announced as a preferred bidder for a share in £1bn of refurbishment work for Sheffield City Council housing. Kier expects to be awarded one-fifth of this work over six years to 2010. It already has a 10-year outsourcing contract with Sheffield which this year provided a turnover of £64.7m.

In its homes division Kier said that unit completions to 31 August 2004 were 43% of last year. Though Kier noted that interest rate rises were returning the market to more sustainable levels of house price inflation.

Kier said that since the year end there had been a lower number of visitors to its developments, though it said that reservations were at acceptable levels and that selling prices were holding up without the need to provide incentives to buyers.

The group said that Kier Partnership Homes the social housing division acquired in November 2002 was still making a loss. Kier said that once management and geographical changes had been implemented it was confident of turning it into a profit-making business.