TIDMKLR
RNS Number : 6810G
Keller Group PLC
17 November 2022
17 November 2022
Keller Group plc
Trading Update
Full year outlook remains in line with expectations; increase in
final dividend
Keller Group plc ('Keller' or 'the Group'), the world's largest
geotechnical specialist contractor, today issues a trading update
for the period ended 30 October 2022 and announces an increase in
the 2022 final dividend.
Since the half year results, trading has continued at record
levels despite the challenging macro environment. The Group remains
on track to deliver a full year performance in line with
management's expectations, supported by an FX tailwind. The order
book remains at a high level, supported by a solid flow of orders
including the GBP45m initial Works Order for the NEOM Project in
Saudi Arabia, which is now rapidly gaining momentum and beginning
to ramp up in terms of activity. Whilst overall macroeconomic
uncertainty continues to increase, the general performance of the
Group, robust order intake and, more specifically, the beginning of
a performance recovery in our North American foundations business,
gives us confidence for the short and medium term.
In North America, trading overall has been as expected with a
continued high level of activity. As a result of management
actions, the challenges in the foundations business relating to
inflation and supply chain issues that impacted profitability in
the first half, have begun to reverse. In addition, actions to
address previously highlighted project execution issues are being
implemented and are also benefitting the operating margin in the
second half. We expect gradual margin recovery back to recent North
America levels in the medium term. Suncoast, the Group's
post-tension business, continues to trade well despite softening in
the residential sector and RECON continues to perform well and
ahead of our expectations at the time of its acquisition.
In Europe, trading remains robust, despite the operational
challenges following the disruption and economic uncertainty in the
region generated by the war in Ukraine. The business continues to
actively manage the impact of price escalations and shortages of
raw materials across the region and in the UK, the HS2 project
continues to progress well. The division continues to refine its
geographic focus as well as develop its product portfolio,
including a small bolt-on acquisition, Nordwest Fundamentering AS,
a specialist geotechnical contractor based in Trondheim, in the
west of Norway.
AMEA (Asia-Pacific, Middle East and Africa) continues to build
on its successful turnaround. At the major NEOM project in Saudi
Arabia, we signed an overall Framework Agreement earlier in the
year which paves the way for multiple contract awards. We have now
received the first Works Order worth GBP45m which will ramp up
through December and January, and will be completed in the first
quarter in 2023. We are well advanced with mobilising the equipment
to site for this initial contract, with the first of the five rig
sets of equipment now being commissioned in country. We are also
accelerating the investment in additional rig capacity to meet the
expected future growth in the volume of work under the Framework
Agreement. While we are in the early stages of this project, it is
evolving into a significant and material opportunity for the
future.
We expect the year end net debt/EBITDA leverage to be c. 1.3x,
within the Group's target range of 0.5x-1.5x reflecting continued
pressure on working capital due to growth in our businesses and on
payment terms with our supply chain, as previously indicated, as
well as an adverse FX impact on the USD portion of our debt. The
Group's underlying effective tax rate is anticipated to be lower
than our previous guidance of 25%, largely due to the ongoing
benefit in North America from research and development tax credits.
The benefit is expected to be sustainable going forward therefore
lowering our overall Group tax rate to c. 22%.
The Board recognises the importance of capital returns to our
shareholders and Keller has consistently and materially grown its
dividend in the 28 years since listing. This unbroken record of
dividends clearly demonstrates the Group's ability to continue to
prosper through economic downturns, including both the global
financial crisis and the pandemic. At the half year results in
August 2022, we recommenced the Group's progressive policy with a
5% increase in the interim dividend. The Board today announces that
it will recommend a further 5% increase in the final dividend to
24.5p (2022: 23.3p). This would bring the 2022 total dividend
payable to 37.7p (2021: 35.9p).
Michael Speakman, CEO, said : "Keller continues to perform well
in a very challenging macro environment. The momentum we achieved
in the first half has continued and we are also now benefitting
from the actions we have taken to improve performance in our North
American foundations business. Our substantial order book, together
with the significant potential of the NEOM project, support our
confidence in the Group's prospects in both the short and medium
term".
The Group will announce its full year results for 2022 on 7
March 2023.
For further information, please contact:
Keller Group plc www.keller.com
020 7616 7575
Michael Speakman, Chief Executive
Officer
David Burke, Chief Financial Officer
Caroline Crampton, Group Head of
Investor Relations
FTI Consulting
Nick Hasell / Matthew O'Keeffe 020 3727 1340
Notes to editors:
Keller is the world's largest geotechnical specialist contractor
providing a wide portfolio of advanced foundation and ground
improvement techniques used across the entire construction
sector. With around 10,000 staff and operations across five
continents, Keller tackles an unrivalled 6,000 projects every year,
generating annual revenue of more than GBP2bn.
Cautionary statements:
This document contains certain 'forward looking statements' with
respect to Keller's financial condition, results of operations and
business and certain of Keller's plans and objectives with respect
to these items. Forward looking statements are sometimes, but not
always, identified by their use of a date in the future or such
words as 'anticipates', 'aims', 'due', 'could', 'may', 'should',
'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably
possible', 'targets', 'goal' or 'estimates'. By their very nature
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, changes in the economies and markets in which the
group operates; changes in the regulatory and competition
frameworks in which the group operates; the impact of legal or
other proceedings against or which affect the group; and changes in
interest and exchange rates. For a more detailed description of
these risks, uncertainties and other factors, please see the Risk
Management approach and Principal Risks section of the Strategic
Report in the Annual Report and Accounts. All written or verbal
forward looking statements, made in this document or made
subsequently, which are attributable to Keller or any other member
of the group or persons acting on their behalf are expressly
qualified in their entirety by the factors referred to above.
Keller does not intend to update these forward looking statements.
Nothing in this document should be regarded as a profits forecast.
This document is not an offer to sell, exchange or transfer any
securities of Keller Group plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
LEI: 549300QO4MBL43UHSN10
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