Keller hails stronger performance in Asia-Pacific as profits jump

A return to profitability at Keller's Asia-Pacific business helped bolster group profits, the geotechnical services contractor confirmed on Tuesday.

Keller, which works on construction projects around the world preparing the ground and laying foundations, among other services, said underlying profits improved 2% to £101.8m on a constant currency basis in the year to 31 December. Statutory pre-tax profits surged to £51.6m from £8.4m. The improvement was largely driven by the return to profit in Asia-Pacific, which had been rocked by challenging market conditions.

Revenues rose 2%, also on a constant currency basis, to £2.3bn. The company said that growth in North America and in Europe, the Middle and Africa, alongside favourable currency rates, had been offset by a planned reduction of activity in Asia-Pacific.

Revenue from APAC declined 27%, to £287m. North America reported 15% growth to £1.33bn, however, while EMEA nudged ahead 2% to £679.6m.

Keller’s home UK market accounts for just 3% of its business.

Michael Speakman, chief executive, said: “2019 was a significant year of decisive progress for Keller. The return to profit in APAC and the group’s strong cashflow generation underpinned the improved financial performance, which was in line with expectations. Our more focused strategy will ensure that Keller evolves in the future to become a more efficient higher-quality business.”

Looking forward, the company said the current year had “started well” with the order book now in excess of £1bn.

However, Speakman also sounded a note of caution. “While we are cautiously optimistic and expect another year of continued progress, supported by our robust order book, we remain cognisant of challenging macroeconomic conditions and the potential indirect impact of Covid-19.”

Peel Hunt, which has a ‘buy’ recommendation on Keller, said: “After a testing first-half, which saw profits down materially, the group bounced back well in the second half and especially the first quarter.

“Divisionally, the star performer was APAC, which returned to profit for the whole year and not just the second half. EMEA was materially lower, as expected due to the completion of two major projects in 2018.

“Covid-19 clearly presents a risk but the group’s direct supply chain is more domestic in its nature.”

Shares in Keller were ahead 7% at 765p by 1430 GMT.