Keller results to be weighted towards Q4 amid US weakness

Geotechnical contractor Keller Group warned on Friday that annual results will be more weighed towards the fourth quarter due to slower-than-expected trading momentum in the US, as it announced the departure of chief executive Alain Michaelis.

The company said full-year results would be "more dependent than usual" on the timing of large contract awards and the crystallisation of a number of claims that were in their final stages of negotiation.

It said US trading momentum in the second half had started slower than previously anticipated and while momentum is now building, there would "inevitably" be an increased weighting towards the fourth quarter. European trading remains "mixed", it said.

Keller continues to expect net debt to reduce year-on-year, driven by an expected improvement in profits. However, it cautioned that full-year revenues would still be broadly flat against the prior year, with improved margins being the main driver of increased profits.

"Keller remains strategically well positioned with ongoing favourable market fundamentals expected to support profitable growth in the medium term," it said.

"The order book continues to be robust, and we remain focussed on positioning the business to take full advantage of the positive market trends of urbanisation and infrastructure growth."

Keller also announced that Alain Michaelis has decided to step down from the role of CEO, effective 30 September.

Michaelis, who will remain available to the company until the end of 2019 to ensure an orderly handover, will be succeeded by current chief financial officer Michael Speakman, while group financial controller Mark Hooper will take over as interim CFO.

Russ Mould, investment director at AJ Bell, pointed out that British businesses are increasingly takeover targets for overseas companies as a weak pound increases a suitor’s purchasing power and said Keller now looks like "a sitting duck" after a spate of bad news.

"It generates a lot of earnings overseas, which are more attractive due to the weakness of sterling. Keller operates in over 40 countries through 22 business units, and generates only 3% of its revenue from the UK. Just over half of group revenue comes from the US market, another third from Europe, and the rest from Asia," he said.

"While it is experiencing various negative issues such as slower than expected trading in North America and uncertainty around contract timing, growing urbanisation and infrastructure spending ultimately provide plenty of growth opportunities for the group."

At 1000 BST, Keller shares were down 4.9% at 629.88p.