Revenue, earnings slightly ahead at Keller Group

As investors gathered for Keller Group’s annual general meeting on Tuesday morning, the ground engineering specialist revealed its numbers were ahead of last year in year-to-date trading.

The FTSE 250 firm said there have been no significant changes in market trends since it reported its 2015 results on 29 February, with good performances from North America and EMEA offset by a disappointing APAC performance contributing to a “slight” lift in revenue and profit to the end of April.

Its board said tendering activity and contract awards were generally healthy, with the group order book of work to be undertaken in the next 12 months 15% higher year-on-year at the end of April, including acquisitions.

Keller said it was on course to meet full-year expectations at this early stage.

In North America, which accounts for more than half of Keller’s revenue, the US construction market continued to grow steadily with both private and public expenditure on construction ahead in the first quarter of 2016, the board reported.

“The Group's US business has had a good start to the year, particularly Hayward Baker, our largest and most broadly-based business, and Suncoast.

“Bidding activity across the US remains robust.”

It added that Keller Canada was still operating in a difficult market, although results are expected to improve in the seasonally better second half as the business begins work on a number of large jobs.

In Europe, conditions in its larger construction markets were reported to be stable, while a low oil price was leading to project delays in the Middle East despite construction activity levels remaining healthy.

“The group's most significant European businesses - the UK, Germany, Poland and Austria - have all had a good start to the year.

“Between them, these businesses account for over half of the division's revenue.”

Elsewhere in the EMEA region, Keller said trading has been mixed, though it was continuing to make “good progress” on its major contract in the Caspian region.

Keller’s main APAC markets - Australia, Singapore and Malaysia - were all described as “very challenging”, with volumes well below those of recent years.

“Whilst trading in India has been solid, elsewhere in Asia and in Australia the group has suffered from reduced revenue in the first few months of the year.

“This reflects both the depressed market conditions and delays in the start dates of certain large projects. As a result, we expect APAC to record a loss in the first half of 2016.”

The board said it was continuing to reduce its cost base to re-size business units in APAC for current and anticipated work levels, and claimed an order book well ahead of last year would lead to a significant increase in revenue and a return to profitability in the second half.

Keller said its financial position was largely the same as in its final results, apart from a £62m property acquisition announced in May.

“We have seen a solid start to 2016 despite a number of difficult markets,” commented Keller CEO Alain Michaelis.

“The order book is strong and we anticipate making continued progress in the remainder of the year.

“Accordingly, the group remains on course to meet the board's expectations for the full year,” he added.

The board also confirmed that at the end of the AGM, Peter Hill will be appointed non-executive director and chairman-designate, with Roy Franklin retiring as chairman and from the board on 26 July.