Trading Statement

RNS Number : 1803Z

Keller Group PLC

16 May 2019

 

For immediate release                                                                                    16 May 2019

Keller Group plc

Trading update

Keller Group plc ("Keller" or "the group"), the world's largest geotechnical specialist contractor, issues a trading update ahead of its Annual General Meeting to be held at 11.00am today.

The Board's expectations for the full year remain unchanged, supported by generally stable market conditions. The group has experienced modest trading for the year to date and continues to expect profits to have a second half bias. Our order book remains around £1 billion, slightly lower than at the same point last year reflecting the previously announced restructuring in APAC.  The order book grew in each of North America and EMEA.

In North America, the adverse steel cost impact in Suncoast experienced in 2018 is now reversing as anticipated and margins have returned to more normal levels. Moretrench, acquired in 2018, is performing well and planned cost synergies have been exceeded. Elsewhere, in North America performance in the first four months has been weaker than anticipated, partly due to mix and partly due to additional costs to recover from the adverse weather experienced in January, but this shortfall is expected to be recovered in the second half. There is no material update in respect of the scope adjustment to the Bencor long term contract, which we continue to negotiate with the client and we remain confident in the position that has been taken.

In EMEA, our European businesses are collectively performing in line with our expectations, with a particularly strong performance from South East Europe. The Middle East is having a much quieter year to date following the completion of major projects and the slow development of new projects. Franki Africa has continued to struggle and we are managing it closely, although it is bidding on new projects in the region. Brazil remains challenging although underlying performance is slightly improved compared to the prior year.

In APAC, our expectation of a return to profitability in the second half remains on track. The restructuring in ASEAN and the subsequent refocusing of the business on ground improvement is proceeding to plan; asset disposals will generate additional cash, and profitability continues to improve. India is performing to plan. Market conditions and performance across our Australian businesses remain mixed, with a slower start to the year than anticipated, but a recovery is expected for the year as a whole. Austral has been affected in the period by the recent cyclone which has impacted all mining and processing activities in the Pilbara, but is expected to recover well. The previously announced restructuring at Waterway has proceeded to plan, and additional action will be taken in response to the further deterioration in the market.

Overall trading performance in the first four months of 2019 has been lower than anticipated but is on an improving trend. This, together with the final completion of our Caspian project in the first half of last year, means that our results for the first half of 2019 will be materially lower compared to the first half of 2018. We continue to expect a much stronger second half, and for full year revenue to be broadly flat on 2018, with an improvement in margin driving a recovery in profit. Net debt has risen slightly since year end, albeit less than expected, and debt leverage is expected to increase as anticipated to over 2.0x at the half year. However, the expected year-on-year profit improvement together with a strong focus on organic cash generation, means that we expect debt leverage to reduce significantly and to be within the group's 1.0x to 1.5x target range by the year end.

Overall Keller continues to expect to make good progress in 2019.

Keller will announce its interim results for the six months ending 30 June 2019 on 29 July 2019.

For further information, please contact:

Keller Group plc          www.keller.com

Alain Michaelis, Chief Executive Officer

Michael Speakman, Chief Financial Officer

Victoria Huxster, Head of Investor Relations

020 7616 7575

Finsbury

Gordon Simpson

James Kavanagh

020 7251 3801

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 10,000 staff and operations across six continents, Keller tackles an unrivalled 7,000 projects every year, generating annual revenue of more than £2bn.

Cautionary statements:

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 Risk Management approach and Principal Risks 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: 2.2 Inside information

 

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