Trading Update

RNS Number : 6810G

Keller Group PLC

17 November 2022

 

 

 

 

17 November 2022  

 

Keller Group plc

 

Trading Update

Full year outlook remains in line with expectations; increase in final dividend

Keller Group plc ('Keller' or 'the Group'), the world's largest geotechnical specialist contractor, today issues a trading update for the period ended 30 October 2022 and announces an increase in the 2022 final dividend.

Since the half year results, trading has continued at record levels despite the challenging macro environment. The Group remains on track to deliver a full year performance in line with management's expectations, supported by an FX tailwind. The order book remains at a high level, supported by a solid flow of orders including the £45m initial Works Order for the NEOM Project in Saudi Arabia, which is now rapidly gaining momentum and beginning to ramp up in terms of activity. Whilst overall macroeconomic uncertainty continues to increase, the general performance of the Group, robust order intake and, more specifically, the beginning of a performance recovery in our North American foundations business, gives us confidence for the short and medium term.

In North America, trading overall has been as expected with a continued high level of activity. As a result of management actions, the challenges in the foundations business relating to inflation and supply chain issues that impacted profitability in the first half, have begun to reverse. In addition, actions to address previously highlighted project execution issues are being implemented and are also benefitting the operating margin in the second half. We expect gradual margin recovery back to recent North America levels in the medium term. Suncoast, the Group's post-tension business, continues to trade well despite softening in the residential sector and RECON continues to perform well and ahead of our expectations at the time of its acquisition.

In Europe, trading remains robust, despite the operational challenges following the disruption and economic uncertainty in the region generated by the war in Ukraine. The business continues to actively manage the impact of price escalations and shortages of raw materials across the region and in the UK, the HS2 project continues to progress well. The division continues to refine its geographic focus as well as develop its product portfolio, including a small bolt-on acquisition, Nordwest Fundamentering AS, a specialist geotechnical contractor based in Trondheim, in the west of Norway.

AMEA (Asia-Pacific, Middle East and Africa) continues to build on its successful turnaround. At the major NEOM project in Saudi Arabia, we signed an overall Framework Agreement earlier in the year which paves the way for multiple contract awards. We have now received the first Works Order worth £45m which will ramp up through December and January, and will be completed in the first quarter in 2023. We are well advanced with mobilising the equipment to site for this initial contract, with the first of the five rig sets of equipment now being commissioned in country. We are also accelerating the investment in additional rig capacity to meet the expected future growth in the volume of work under the Framework Agreement. While we are in the early stages of this project, it is evolving into a significant and material opportunity for the future.

We expect the year end net debt/EBITDA leverage to be c. 1.3x, within the Group's target range of 0.5x-1.5x reflecting continued pressure on working capital due to growth in our businesses and on payment terms with our supply chain, as previously indicated, as well as an adverse FX impact on the USD portion of our debt. The Group's underlying effective tax rate is anticipated to be lower than our previous guidance of 25%, largely due to the ongoing benefit in North America from research and development tax credits. The benefit is expected to be sustainable going forward therefore lowering our overall Group tax rate to c. 22%.   

The Board recognises the importance of capital returns to our shareholders and Keller has consistently and materially grown its dividend in the 28 years since listing. This unbroken record of dividends clearly demonstrates the Group's ability to continue to prosper through economic downturns, including both the global financial crisis and the pandemic. At the half year results in August 2022, we recommenced the Group's progressive policy with a 5% increase in the interim dividend. The Board today announces that it will recommend a further 5% increase in the final dividend to 24.5p (2022: 23.3p). This would bring the 2022 total dividend payable to 37.7p (2021: 35.9p).

Michael Speakman, CEO, said : "Keller continues to perform well in a very challenging macro environment. The momentum we achieved in the first half has continued and we are also now benefitting from the actions we have taken to improve performance in our North American foundations business. Our substantial order book, together with the significant potential of the NEOM project, support our confidence in the Group's prospects in both the short and medium term".

The Group will announce its full year results for 2022 on 7 March 2023.

For further information, please contact:

Keller Group plc	www.keller.com 020 7616 7575
Michael Speakman, Chief Executive Officer David Burke, Chief Financial Officer Caroline Crampton, Group Head of Investor Relations
FTI Consulting Nick Hasell / Matthew O'Keeffe	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 10,000 staff and operations across five continents, Keller tackles an unrivalled 6,000 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: 549300QO4MBL43UHSN10

Classification: 2.2 Inside information

 

END

 

 

TSTBFBRTMTTBBMT