Kier Group will buy back £20million from investors as the infrastructure group continues to cash in on major public spending initiatives and slash its debts.
The FTSE 250 infrastructure group told shareholders on Tuesday it expects to report a net cash position for 2024, having cut its average month-end net debt to £38million from almost £137million last year.
Kier restarted dividends last year as strong cash generation helped deleverage the group’s balance sheet and free up cash to return to investors.
The group, which saw Its order book swell 2 per cent last year to £11billion, said it was ‘well positioned to benefit from UK Government and regulated industry infrastructure spending plans’.
The Prime Minister and the Chancellor have promised a wave of spending on Britain’s decaying infrastructure and shortage of homes.
Kier Group shares were up 5.1 per cent to 145.4p in early trading, bringing one-year gains to 12.9 per cent.
Keir boosts Kier: The Prime Minister and the Chancellor have promised a wave of spending on Britain’s decaying infrastructure and shortage of homes
It marks another solid update after Kier told shareholders in November it had made a good start to its trading year.
Kier said on Tuesday it ‘continued to trade well’ in the months since its last update, with results in line with expectations and performance likely weighted to the second half of the year.
Analysts have previously flagged Kier as one of the key beneficiaries of Labour policies, with its water infrastructure and property arms well placed.
Kier highlighted a recently secured £240million contract from the Ministry of Defence to design and build new accommodation at Keogh Barracks in Surrey, as well as its work to support a £500million plan to reduce the carbon footprint of the NHS estate.
Its infrastructure businesses is working with Yorkshire Water to support the utility’s £850million investment in water processing and waste networks.
Kier said: ‘We continue to believe that as a strategic supplier to key areas of the new Government’s priorities, including transport, education, healthcare, justice, defence and nuclear, there are significant medium term growth opportunities for the group.
‘Alongside these we should also further benefit from the very substantial investment plans being announced in regulated industries, notably water.’
Boss Andrew Davies added: ‘The strength of our cash generation combined with the multi-year revenue visibility afforded by our growing quality order book and underpinned by our strong balance sheet, gives us the confidence that this momentum will continue.
‘Given our order book growth combined with our continued de-levering and greater confidence that we will achieve an average month-end net cash position, we have announced today a £20million share buyback, as part of our evolved capital allocation policy to maximise shareholder returns.’
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