Kier seeing signs of life in private sector as profits rise

The group, which repairs thousands of council homes across Yorkshire, said it is seeing signs of life in the private commercial market as previously mothballed sites are restarted.

Kier said it has secured more than 90 per cent of targeted revenue for next year on its order book.

"Whilst we anticipate further cuts to public sector expenditure our strong and diverse business model will enable us to seek out a range of opportunities, including those in areas of non-discretionary expenditure," said the company. Kier recently said it has limited exposure to the new schools programme, recently targeted by the government for spending cuts, so does not expect a material impact on its order book.

However, the group is targeting opportunities in power, utilities, rail, waste, mixed use and international to buffer it from further savage spending cuts.

The group's building maintenance arm is working on social housing in Hull, Sheffield and Leeds, and is also bidding for contracts in Rotherham and North East Lincolnshire. Kier said while it expects council budgets to be cut, partnerships with local authorities will help it expand.

The group expects its public sector property management arm, which already works with Sheffield Council, to win more work as councils look to reduce costs.

Kier added its net cash at the end of June was more than 170m compared with 93m a year earlier.

It also said finance director Deena Mattar intends to leave the company in November. She will be replaced by Haydn Mursell, who is deputy group finance director at rival construction firm Balfour Beatty.

Panmure Gordon repeated its "buy" stance on Kier, and said the update is "likely to drive earnings upgrades".

The broker said: "Its non-development activities continue to perform well, while the balance sheet has strengthened further.

"The change of financial director is a surprise but the group has acted quickly, securing what looks like a good replacement."