Kier Group (LON:KIE) reported a “strong first half” in its FY2026 results, citing growth in revenue and profit, a record order book, and a milestone improvement in cash generation that management said it had not achieved in 13 years.
Chief Executive Stuart Togwell, delivering his first half-year presentation in the role, said the group’s order book rose 5% during the period to a record £11.6 billion, providing multi-year visibility. Kier said it has secured 94% of expected FY2026 revenue and 78% of expected FY2027 revenue through its order book. Chief Financial Officer Tom (who joined in January) added that the group has a £35 billion pipeline visible for this year and next, with framework positions supporting “at least five years” of revenue visibility.
First-half financial performance and cash position
The group ended the half with a net cash position of £103 million, compared with £58 million at December 2024. Kier also highlighted an operational milestone: an average net cash position of £16.8 million for the half, compared with an average net debt position of £37.6 million in the prior-year period. Togwell said this marked “the first time in 13 years” the company had delivered average net cash.
On cash flow, the company reported adjusted EBITDA of £101 million and a working capital outflow of £107 million, which was broadly in line with the prior year and described as typical for the first half. Capex was £24 million, largely linked to lease payments capitalized under IFRS 16. The result was a free cash outflow of £42 million, which management said was slightly improved versus the prior-year period.
Divisional trends: infrastructure growth, construction transition, property progress
Infrastructure Services was the main contributor to first-half revenue growth, with revenue up 4.9% to £1.083 billion. Management attributed this to road capital projects, increased rail work including HS2, and a ramp-up in water activity under AMP8. The division delivered adjusted operating profit of £48.2 million, up £2.1 million, while maintaining a 4.5% margin.
Construction revenue was £920 million, down 1.3%. Tom said the decline reflected a transition to modular construction, with an expectation that revenue would “bounce back in the second half” as offsite work moves on-site. The construction business maintained an operating margin of 3.9%. In Q&A, management said modular construction can bring cash in “slightly earlier” and could be “positive from a cash perspective.”
Property transactions increased modestly, and management again pointed to a seasonally stronger second half. Togwell said the property division remains on track to deliver its long-term ROCE target of 15% by FY2028. Kier disclosed property gross development value of £3 billion, with 60% of sites holding planning permission, six sites in construction, and four schemes being actively marketed for sale.
Order book, frameworks, and recent wins
Management provided additional color on order book composition and framework opportunities. Infrastructure Services order book stands at £7.1 billion, up 6%, with 92% of FY2026 work secured. Construction’s order book is £4.5 billion, up 5%, with 96% secured for FY2026.
Examples of framework and project activity cited on the call included:
- National Highways Legacy Concrete Framework (over £900 million, Kier one of three)
- Thames Water treatment works upgrade at Maple Lodge (£280 million)
- A two-year extension at Hinkley Point C
- Appointment to British Airways’ Better Buildings Framework
- Construction: placement on the £37 billion New Hospital Programme 2.0 Alliance framework
- Construction: placement on the Department for Education’s £15 billion CF25 framework
- Construction: Government Property Agency hub in Darlington (£85 million)
Togwell noted that some Department for Education pre-construction agreements (including eight schools awarded in the second quarter) were not yet reflected in the order book. He also said the group aims to hold meaningful positions on frameworks, often targeting “one in three,” to help influence delivery approaches and work closely with customers.
Shareholder returns, safety remediation costs, and financing
Kier announced a proposed interim dividend increase to £0.026 per share, which management described as a 30% increase, alongside a new £25 million share buyback program. This follows completion of a prior £20 million buyback. During the half, Kier paid £23 million in dividends, executed £14 million of buybacks, and purchased £15 million of shares for its employee benefit trust.
Adjusted items in the half totaled £10.7 million (excluding non-cash amortization interest) and were described as solely related to fire and cladding compliance costs. Tom said the company expects around £30 million of such charges for FY2026 and a similar level in FY2027, with costs expected to reduce after FY2027 and be resolved by the end of FY2028. In Q&A, he said the estimates reflect a project-by-project assessment of potential liabilities and insurance recoveries, noting the uncertainty around when liabilities crystallize.
On financing, Kier said it refinanced its revolving credit facility in October with a new three-year £190 million facility, including an option to extend for two additional years. The company also referenced credit rating improvements, with S&P upgrading it to BB+ and Fitch moving its outlook from stable to positive while maintaining BB+. In response to an analyst question, Tom said the company will review options around its bond, which he described as carrying a 9% coupon, and may consider going to market “at the end of the first quarter.”
Looking ahead, Togwell said momentum had continued into the second half with further framework appointments, and that the group was “trading in line with board expectations,” with full-year expectations unchanged. Management reiterated medium-term targets including revenue growth above GDP, adjusted operating margin of 4% to 4.5%, cash conversion of around 90% of operating profit, average net cash, and dividend cover of around three times earnings through the cycle.
About Kier Group (LON:KIE)
Kier Group is a leading infrastructure services, construction and property group based in the UK.
Our purpose is to sustainably deliver infrastructure which is vital to the UK with a vision is to be the UK’s leading infrastructure services and construction company.
We operate through three segments; Infrastructure Services, Construction and Property. Infrastructure Services comprises our Transportation and Natural Resources, Nuclear and Networks business. Transportation: builds and maintains roads for National Highways and a number of district and county councils as well as our rail, airports’ infrastructure and ports’ businesses.
Natural Resources, Nuclear and Networks: delivers long-term contracts providing repairs, maintains and support capital projects to the water, energy, and telecommunications sectors.
Construction — comprises of our Regional Building, Strategic Projects, Kier Places (Housing Maintenance and Facilities Management), and International businesses.
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