AGM Statement
Ahead of its Annual General Meeting to be held at 10.00 a.m. today, Keller Group plc (“Keller” or “the Group”), the international ground engineering specialist, issues its Interim Management Statement covering the period 1 January to 18 May 2009.
Overview
The global recession continues to affect almost all of our markets and private funding for construction projects remains scarce. Whilst we have experienced a shift towards more publicly-financed projects, we have not as yet felt any noticeable impact from promised fiscal stimulus measures and we do not anticipate that these will benefit the Group before 2010.
As reported in March, order intake in the autumn of last year quickly fell by around 20% in constant currency terms; since when, orders have stabilised. Therefore, as anticipated, revenue and operating profit in the year to date are materially down on a constant currency basis compared with the same period last year, although the impact has been somewhat mitigated by the relative weakness of sterling. Accordingly, we have already taken steps to re-size the business in a number of geographies and we will continue to take actions where necessary, as well as maintaining our focus on cash management.
Given the Group’s performance to date and the order book at the end of April, the expected results for the full year remain within the current range of market expectations.
Divisional Review
US
With the slowdown in commercial and office building, our US foundation contracting businesses have relied more heavily on public infrastructure and power-related projects, where spending has remained robust. As we anticipated, tighter pricing, in response to increased competition, has weakened margins.
Sun coast, with its significant residential exposure, has continued to respond to the slump in that sector with additional cost reduction measures, including a further cut of around 10% in its workforce in the last quarter.
Continental Europe, Middle East & Asia (CEMEA)
Across our diverse markets within the CEMEA division, performance remains somewhat mixed. The Middle East has been particularly impacted by a continued extension of lead times for the award of large contracts, although our profit from the region in the year to date has been good. In Eastern Europe, where our order book remains well above the level at this time last year, the slowdown in investment has delayed certain projects and the region is seeing a significant inflow of competition from neighbouring markets. Elsewhere in Europe, trading has held up fairly well, despite sluggish demand and the adverse impact of severe weather conditions in the first quarter.
Australia and UK
Overall, our Australian business has performed well in the year to date, with good results and orders from several large infrastructure projects mitigating the impact of weakness in the commercial building sector.
In the UK, further downsizing has been necessary, as UK housing remains in the doldrums and opportunities in the commercial sector are significantly reduced.
Financial Position
The Group’s financial position remains strong. Other than the normal seasonal increase in working capital, there has been no significant change to our financial position since the last year end.
Board Change
As announced separately today, Dr Michael West, who has chaired the Group since 1995, will retire as Chairman at the end of July. He is to be succeeded by Mr Roy Franklin OBE, who joined the Board as a Non-executive Director in 2007.
Notice of Interim Results
Keller intends to announce its interim results on Friday, 31 July 2009.