Keller Group plc (‘Keller’ or ‘the Group’), the world’s largest geotechnical specialist contractor, issues a trading update for the first four months of the year ahead of its Annual General Meeting to be held at 9.00am today.
The Board’s expectations for the full year remain unchanged, with improving market conditions and a more positive outlook offsetting a translational foreign exchange headwind driven by the strengthening GBP. Trading for the year to date is slightly ahead of our expectations, benefitting from the positive resolution of a historical claim in North America, although lower than the strong comparative period last year. Trading was affected by adverse weather and delays on a number of large projects. Whilst some soft spots remain, markets generally are beginning to firm and our order book is above £1 billion. We expect full year profits to have the usual second half bias, and to reflect an increase in market confidence and trading momentum as the year progresses.
Health and safety
As always, our first priority is the health and safety of our employees and we have kept our focus on both operational and COVID-19 safety during the local ebbs and flows of the global pandemic. This approach has enabled us to work in a safe and productive manner on sites wherever the local regulatory regime allows, using applicable personal protective equipment and social distancing.
The slowdown of the global construction market that we highlighted previously led to lower trading volume at the end of 2020 and during the start of 2021. Whilst some countries continue to be impacted by COVID-19, notably India and parts of Europe, the success of vaccination and lockdown containment programmes in many other countries, most notably North America, is leading to increased business confidence and improved market demand generally. The combination of increased activity and disrupted supply chains is beginning to cause some localised material shortages, affecting spot pricing and more importantly material availability.
In North America, our foundations business traded as expected, negatively impacted by weather and COVID-19 whilst benefiting from the resolution of an historical claim in relation to a large civic project completed in 2017. Suncoast, the Group’s post-tension business, is benefitting from strong demand from the residential, single family home, market, which is offsetting the impact of higher steel prices.
In Europe1 our business had a mixed start to the year, with adverse weather impacting activity in some geographies, offset by the award of two joint venture contracts for the High Speed 2 (HS2) railway project worth a total of £131m (Keller’s share). Whilst work on the C1 package which we are executing as part of the Keller Group and VSL International joint venture (KVJV), remains on schedule, the client has rescheduled work on the C2/C3 sections which will now ramp up slightly later than originally expected. The Sandbukta-Moss-Sastad rail project (SMS2) in Norway, has also been affected by a schedule delay as a consequence of a local landslide.
In Asia-Pacific, Middle East and Africa (AMEA1), the ASEAN business continues to feel the impact of COVID-19 with reduced trading activity in the period, though we expect activity to pick up in the second half. Australia experienced a difficult first quarter due to unusually heavy rain on the East coast and cyclones on the West coast. Notwithstanding this, at Austral, the Cape Lambert project continues to progress well and we continue to benefit from securing additional mining-related projects, most recently work relating to Rio Tinto’s Gudai-Darri iron-ore rail project. In Africa, the business is being negatively impacted by the suspension of the liquified natural gas (LNG) contract in Mozambique following an escalation in terrorist attacks in the region. Business activity in the Middle East and South Africa is increasing and we expect this to continue to improve during the course of this year.
We continue to make strategic progress to transform the Group into a more focused, higher-quality business with some further reorganisation in Europe where our French Speaking Countries (FSC) will merge with our Iberia and Latin America business unit to form a new South West Europe Business Unit, effective 1 July 2021. We have also completed the process of reducing the size of our Europe divisional headquarters which will reduce our future operating costs. Across the Group we continue to seek and exploit market-focused growth opportunities, both organic and through acquisition, to command a leading share in our chosen markets.
Whilst some soft spots remain, markets generally are beginning to firm and the Board’s expectations for the full year remain unchanged, with the usual second half bias, reflecting the increasing market confidence and trading momentum as the year progresses. We expect the Group’s net debt to remain in the lower half of the 0.5x – 1.5x target range throughout the year.
At today’s Annual General Meeting approval is being sought for the 2020 final dividend of 23.3p per share (2019: 23.3p per share) to be paid on 25 June 2021 to shareholders on the register as at the close of business on 4 June 2021.
The Group’s half-yearly results for the six months ending 30 June 2021 will be announced on 3 August 2021.
1From 1 January 2021 the Middle East and Africa (MEA) business was transferred to the APAC division, creating Asia-Pacific, Middle East and Africa (AMEA) division, and the remaining EMEA division became our Europe division.
For further information, please contact:
Keller Group plc
Michael Speakman, Chief Executive Officer
David Burke, Chief Financial Officer
Caroline Crampton, Head of Investor Relations
020 7616 7575
020 3727 1340
Notes to editors:
Keller is the world's largest geotechnical specialist contractor providing a wide portfolio of advanced foundation and ground improvement techniques used across the entire construction sector. With around 9,000 staff and operations across five continents, Keller tackles an unrivalled 6,000 projects every year, generating annual revenue of more than £2bn.
This document contains certain 'forward-looking statements' with respect to Keller's financial condition, results of operations and business and certain of Keller's plans and objectives with respect to these items. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably possible', 'targets', 'goal' or 'estimates'. By their very nature forward looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies and markets in which the Group operates; changes in the regulatory and competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; and changes in interest and exchange rates. For a more detailed description of these risks, uncertainties and other factors, please see the Principal risks and uncertainties section of the Strategic report in the Annual Report and Accounts. All written or verbal forward looking-statements, made in this document or made subsequently, which are attributable to Keller or any other member of the Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Keller does not intend to update these forward-looking statements. Nothing in this document should be regarded as a profits forecast. This document is not an offer to sell, exchange or transfer any securities of Keller Group plc or any of its subsidiaries and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction. Securities may not be offered, sold or transferred in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act of 1933 (as amended).
LEI number: 549300QO4MBL43UHSN10 Classification: 3.1 Additional regulated information