Kier keen for Crossrail 2 after delivering a 30 per cent rise in revenue for the last six months, the share price reaction is muted however

 
Billy Bambrough
Follow Billy
BRITAIN-TRANSPORT-CROSSRAIL
The first Crossrail project is scheduled to be finished in 2019 (Source: Getty)

Construction group Kier is set to win big from government infrastructure spending over coming years, following the chancellor George Osborne announcing fresh funding for projects in the Budget yesterday.

Kier is expecting to win work on the Crossrail 2 London rail development after taking the lion's share of contracts on the first Crossrail, now named the Elizabeth line.

“We are keen to start on Crossrail 2. Crossrail 1 was a great project for us, we were the biggest contractor,” said chief executive Haydn Mursell.

The chancellor set aside £80m for Crossrail 2, amongst £300m of additional spending focused on the North of England. The first Crossrail runs from East to West London, while the second line will connect the North and South of the capital.

“The infrastructure spend looks good for us. It’s very pleasing,” Mursell added.

Read more: Adonis says Crossrail 2 will keep London moving so "we should get on with it right away"

Kier this morning announced results for the six months to December. Revenue rose by 30 per cent to £2bn, up from £1.6bn in 2014.

Pre-tax profit slide by 35 per cent however, as the company absorbed the cost of the acquisition of consultancy group Mouchel last year.

As a result of the deal non-underlying costs rose to £26.2m from £9.2m in 2014.

Kier said the cost was "as forecast", adding the integration was "substantially complete".

Mursell warned: "There will be additional costs from the deal, but we will only spend that if the cost savings are likely to be higher than we originally forecast. At the moment it looks like they will be."

Mursell estimated costs could rise by as much as £10m.

Stripping out costs from the acquisition, underlying pretax profit was up 19 per cent on the year to £44.2m.

In the Budget announcement Osborne also committed cash to the high speed HS3 rail link between Manchester and Leeds, extensions to the M62, and a new tunnel road from Manchester to Sheffield.

Read more: HS3 rail work needs to start as quickly as possible

The decision was made after the National Infrastructure Commission (NIC) suggested recommended the spending.

“The national infrastructure commission will be speeding up and fast tracking projects. It’s music to my ears,” said Mursell.

In October last year Osborne launched the National Infrastructure Commission to oversee £100bn of spending on infrastructure projects

Kier has hiked its interim dividend by 12 per cent to 21.5p per share, from 19.2p.

Related articles