Reporting pre-tax profit up 20% to £4.7m on turnover up 37% to £462m for the six months to 31 December 1998, chairman Colin Busby said PFI costs remain high.
In the second half of last year, Kier's spending on its corporate overheads and finance costs knocked £3.4m off the pre-tax profit, compared with £2.1m in the same period a year earlier.
Busby said: "Shareholders will note the further rise of corporate costs in our segmental profit reporting. This heading includes the costs we are incurring to bid and promote PFI projects. I see the PFI as being of major importance to the future of Kier, and we shall continue to spend under this heading." He said Kier was focusing on health, education and defence projects, and he was also optimistic about PFI prospects for Kier's facilities management firm, Caxton Facilities.
Construction turnover rose 33% to £412.7m. The division's pre-tax profit increased 20% to £5.4m. Kier's construction order book also looks healthy. This was worth £645m last December compared with £525m in December 1997.
Busby said: "The major building division has seen a significant uplift in turnover and opportunities, with no sign of a future downturn." Regional construction arms, which focus on smaller works, are also performing well.
I see PFI as being of major importance to the future of Kier, and we shall continue to spend on it
Colin Busby, Chairman, Kier
The chairman praised the performance of Kier's contracting teams, which generated enough money in the second half of the year to help the firm invest in housing, land and plant.
Schemes for Railtrack, Tesco, Virgin, developer Heron and a clutch of leisure, education and hospital projects are helping Kier's performance.
But Busby said: "Internationally, we are experiencing uncertainty in a number of marketplaces, particularly in parts of the Far East, which causes us to be cautious." Turnover at Kier's much smaller homes division was up 90% to £49.3m, reflecting the acquisition of South-east housebuilder Bellwinch. Busby said the housing market had shown a generally satisfactory level of interest in recent months, with houses selling for an average of £121 900, compared with £106 000 the previous year.
Busby said he hoped that the present environment of low interest rates and low inflation meant that the industry had broken free of boom-bust cycles .
