Keller on track as global markets start to pick up

Keller Group left its full-year forecasts unchanged on Wednesday, after forex headwinds and adverse weather were offset by improving market conditions.

The specialist geotechnical contractor, which was hit by the slowdown in the global construction market last year, provided an update on trading during the first four months of the year at its annual general meeting.

It noted: "While some countries continue to be impacted by Covid-19, notably India and some parts of Europe, the success of vaccination and lockdown containment programmes in many other countries, notably North America, is leading to increased business confidence and improved market demand generally."

However, Keller also flagged localised material shortages, caused by increased activity and disrupted supply chains, while poor weather affected some European geographies.

It also impacted North America, along with Covid-19, although that was partially offset by the resolution of a historic claim relating to a large civic project completed in 2017.

Keller said: "The board’s expectations for the full-year remain unchanged, with improving market conditions and a more positives outlook offsetting a translational foreign exchange headwind driven by the strengthening pound.

"Trading in the year-to-date is slightly ahead of our expectations.

"While some soft spots remain, markets are generally beginning to firm and our order books is above £1bn."

Peel Hunt, which has a ‘buy’ rating and 950p target price on Keller, said: "The shares have risen 20% year-to-date, marginally ahead of the building materials space, which is up 17%. On our unchanged forecasts, the shares are trading on a PE of 11.7/8.7x for 2021/2022. We continue to think these multiples look far too low given the group’s market position and outlook for infrastructure activity in the next few years."

As at 1145 BST, shares in Keller were off 1% at 831.95p.