Half-year results show 43% fall in group profit but construction division bucks the trend with 21% rise

Kier Group has announced falls of 43% in pre-tax profit and 8% in revenue for the second half of last year, but the construction division achieved 21% growth in pre-tax profit and a 1.6% rise in revenue.

Group pre-tax profit for the six months to 31 December 2008 was £25.3m, down from £44.6m for the same period in 2007, while revenue fell 8%, down from £1,205.5m to £1,108.7m.

Revenue and profit growth in the construction and support services divisions was offset by falls in housing and developments income.

Kier's Junction development in Glasgow
Kier's Junction development in Glasgow – declines in the homes sector offset gains in construction

The construction division's 1.6% increase in revenue was driven by a surge in public sector work, and pre-tax profit leaped 21% from £23.9m the previous year to £28.9m. The division's operating profit increased by 36.7% to £19.0m.

In the six months to 31 December, Kier said that public sector work represented 67% of total awards, compared with 50% in 2007.

Education work was also noted as being particularly “buoyant”, accounting for £400m of the firm's total awards for the six-month period.

Health and custodial sectors were also active, with the ProCure21 health framework providing Kier with £324m of work to date, with £34m in the six months to 31 December.

The energy sector accounted for 17% of the group's awards in the period.

Kier said the outlook for its construction business remained positive, with secured orders and probable awards together accounting for around 80% of the firm's expected revenue for 2010.