IN Brief:
- Kier will make no new investments in property developments from FY27 and will realise existing capital in line with current development schedules.
- Group revenue rose 7.5% to £4.39bn in FY26, while the order book increased 8.2% to a record £11.9bn.
- Infrastructure revenue grew 10% to £2.34bn, as Kier sharpened its capital allocation around its core construction and infrastructure businesses.
Kier will stop making new investments in property developments from its 2027 financial year as the group concentrates capital on infrastructure, construction and strengthening its balance sheet.
The decision marks a strategic narrowing for a business whose property division has historically sat alongside its contracting operations. Kier said existing developments will be managed in a controlled way, balancing timing and value, with capital realised in line with current development schedules rather than through an abrupt disposal programme.
The shift was announced with results for the year ended 30 June 2026. Revenue, including the group’s share of joint ventures, rose 7.5% to £4.393bn from £4.088bn, while adjusted operating profit increased 6.7% to £169.8m. Statutory profit before tax rose 7.3% to £83.8m.
Kier’s order book increased 8.2% to a record £11.9bn at year end, compared with £11.0bn a year earlier. More than 95% of expected FY27 revenue and more than 70% of FY28 revenue were secured at the time of the results, giving the group substantial forward visibility as it changes where new capital is deployed.
The strongest growth came from infrastructure. Revenue in the division rose 10% to £2.340bn and adjusted operating profit increased 16% to £128.7m, lifting the adjusted margin from 5.2% to 5.5%. The infrastructure order book reached £7.4bn, up 14% year on year.
Kier attributed that activity to work across water, roads, rail, energy and other infrastructure markets. The group has positions on water frameworks worth around £11bn with ten customers and more than 140 live projects, while road and rail work includes National Highways design programmes, local-authority highways services and station delivery.
Construction revenue increased 4% to £1.987bn, with adjusted operating profit rising 2% to £77m. The division’s £4.5bn order book was broadly unchanged from the previous year and did not include the approximately £500m Hinchingbrooke hospital redevelopment awarded after year end.
Against those figures, the property operation is comparatively small. Property revenue increased from £38.4m to £63.4m in FY26, but adjusted operating profit fell from £12.2m to £9.1m. Capital employed increased to £222m while return on capital employed dropped from 6.7% to 4.3%.
The segment figures help explain the capital-allocation decision. Property development ties up cash in land and schemes before value is realised, while Kier’s infrastructure and construction businesses are operating through large frameworks and long-term public and regulated investment programmes backed by a substantial secured pipeline.
The change also comes after a marked improvement in cash. Kier reported average net cash of £10.7m for FY26, compared with average net debt of £49.2m in the previous year, while year-end net cash rose 13.9% to £232.4m. Free cash flow increased 6.2% to £165m and operating cash conversion reached 121%.
The significance is broader than one division receiving less capital. Cash discipline affects the headroom available for bonding, working capital, acquisitions, technology investment and shareholder returns while large construction programmes move through procurement and delivery. Kier is targeting average net cash of more than £200m by FY29 as part of its updated medium-term objectives.
The group is also investing in its Naturally Digital programme, including digital capability and AI-enabled tools intended to improve productivity and delivery. That places the property decision within a broader attempt to concentrate resources on businesses and capabilities tied directly to contracted infrastructure and construction work rather than committing fresh capital to development exposure.
There remain costs and risks within the core operations. Kier recorded £32.1m of fire and cladding compliance costs in FY26, principally relating to updated regulations on legacy projects. The construction division’s reported operating profit fell to £44.3m even as adjusted operating profit edged higher, illustrating how remediation liabilities continue to affect statutory performance across the sector.
The order book is increasingly weighted towards the areas Kier now intends to prioritise. The group says its framework positions extend to around £200bn across healthcare, water, defence, energy, education, transportation and regional construction. Ending new property investment will not remove the existing development portfolio immediately, but it sets a clearer boundary around where additional capital will be committed from FY27.
The practical test will be how quickly capital is released from the current property schemes and whether infrastructure and construction can convert their record pipeline into the higher margins, cash generation and average net cash Kier is targeting. For now, the group enters FY27 with a larger order book, stronger cash position and a narrower definition of the businesses it intends to fund for growth.
