For immediate release Tuesday, 19 November 2013
Keller Group plc
Interim Management Statement
Keller Group plc ("Keller" or "the Group"), the international ground
engineering specialist, issues this Interim Management Statement, covering the
period from 1 July to 18 November 2013.
Overview
The Group's trading in the four months to the end of October has continued the
improving trend established in the first half of the year.
Although there has been no significant change in overall market conditions
since we last reported, our project awards have increased. Accordingly, the
value of the like-for-like order book at the end of October, for work to be
executed over the next 12 months, is now slightly above this time last year.
As expected, revenue has been broadly flat, after adjusting for the effect of
acquisitions. However, the efficiencies driven by our ongoing business
improvement initiatives, combined with very strong final results on some
completed major projects, have generated better-than-expected margin
improvement.
Accordingly, the Group's results for the full year are expected to be slightly
above the top end of current market expectations.
Divisional Review
North America
The US construction market as a whole continues to recover, albeit there are
some indications that the rate of recovery is slowing. Private expenditure on
construction continues to grow, while public expenditure has fallen for the
third consecutive year.
Following a strong first half, our North American business has continued to
perform well. Our US foundation contracting companies are expected to end the
year with both revenue and, in particular, profit significantly ahead of last
year. North American Piling, which we acquired in July 2013 and have rebranded
as Keller Foundations Canada, is performing in line with our expectations at
the time of the acquisition. Our post-tension cable systems business, Suncoast,
continues to benefit from the positive momentum in the US residential sector.
Europe, Middle East & Africa (EMEA)
Conditions in our key EMEA construction markets remain mixed and in those
regions where we have started to see signs of improvement, recovery continues
to be somewhat fragile.
Despite this market backdrop, we expect overall revenue for the full year to be
ahead of last year. In profit terms, the self-help measures implemented by
management continue to bring benefits, which we expect to be reflected in a
much improved full-year operating margin.
In South Africa, Esorfranki Limited has secured shareholder approval for our
acquisition of its geotechnical division, which we announced in October. The
acquisition is set to complete by the end of November.
Asia
Overall, we have seen little change in the conditions in our Asian markets.
Revenue in the last four months has lagged behind the corresponding period last
year, reflecting a slowdown in the Indian market and the absence of a major
project in Malaysia to replace the Vale contract. However, operating profit for
the full year is expected to be close to last year's level, helped by a strong
finish on a number of projects and a good start on the Sengkang hospital
project in Singapore, which together have helped to offset a weaker result in
India.
Australia
As we reported in July, the resources sector of Australia's construction market
has been less buoyant than in recent years and this has not changed discernibly
in the past four months. Nor has there been any improvement in the weak
commercial and infrastructure sectors.
Overall, however, Keller Australia has fared better than the market conditions
might suggest, thanks to a strong performance on some of its larger contracts.
In particular, since our last report, encouraging progress has been made on the
Wheatstone contract, the value of which has now reached A$200m (£116m) and
which we expect will contribute towards a much-improved full-year result.
Financial Position
There has been no material change in the financial position of the Group since
the interim results announcement on 30 July 2013.
Outlook
Given the better-than-expected improvement in the overall margin in the period
to the end of October, driven largely by business efficiencies and strong
contract outcomes, the Group's results for the full year are expected to be
slightly above the top end of current market expectations.
Looking further ahead, we remain optimistic about the long-term prospects for
our sector and our business. Recent acquisitions have increased the Group's
presence in higher-growth regions and we feel that our business is in good
shape to take full advantage of future opportunities.
Keller will issue a pre-close statement in respect of the year ending 31
December 2013 on 19 December 2013.
For further information, please contact:
Keller Group plc www.keller.co.uk
Justin Atkinson, Chief Executive 020 7616 7575
James Hind, Finance Director
Finsbury
Gordon Simpson, Rowley Hudson 020 7251 3801
This document contains forward-looking statements which have been made in good
faith based on the information available at the time of its approval. It is
believed that the expectations reflected in these statements are reasonable,
but they may be affected by a number of risks and uncertainties that are
inherent in any forward-looking statement which could cause actual results to
differ materially from those currently anticipated.
Note to Editors
Keller is the world's largest independent ground engineering specialist,
providing technically advanced and cost-effective foundation solutions to the
construction industry. With annual revenue of around £1.5bn, Keller has
approximately 8,000 staff world-wide.
Keller is the clear market leader in the US and Australia; it has prime
positions in most established European markets; and a strong profile in many
developing markets.