TIDMKLR
RNS Number : 9745E
Keller Group PLC
05 July 2023
5 July 2023
Keller Group plc
Trading Update
Record start to the year; full year operating profit to be
materially ahead of previous expectations
Keller Group plc ('Keller' or 'the Group'), the world's largest
geotechnical specialist contractor, issues a trading update ahead
of the announcement of its interim results for the half year ended
30 June 2023 scheduled for 1 August 2023.
Trading in the first half has remained strong and we anticipate
a record performance in the period. Given our trading performance
to date, together with our continuing robust orderbook, we expect
full year underlying operating profit to be materially ahead of
previous market expectations, with the increase in earnings
moderated by the impact of recent interest rate increases. Given
the timing and phasing of certain contracts, we now expect profit
to be more evenly weighted between the first and second half of
2023.
In North America, the operational improvements in the
foundations business we outlined in November 2022 have continued to
be effective and have resulted in a strong recovery in the
operating margin in line with our plans. At Suncoast, whilst
production volume has decreased, we have actively managed margins
to deliver an improved overall performance year-on-year. This
benefit is expected to moderate in the second half.
In Europe, whilst cost inflation has stabilised and supply chain
issues have eased, the recessionary backdrop has presented some
challenges, particularly in North East Europe, leading to some
margin erosion and some project delays. Several large projects in
the prior period, including HS2 in the UK, provide a challenging
comparator for H1 2023.
In Asia-Pacific, Middle East and Africa (AMEA), the new
management team at Austral have substantially addressed the
remaining issues in the near-shore marine business. At NEOM, we are
in advanced discussions with the client in respect of the award of
a second works order which is expected to be at least twice the
size of the first works order that was completed in February 2023
(cGBP40m). As previously indicated, the precise phasing of this
material project remains subject to variation and will require
measured investment in equipment and working capital as it
accelerates.
Cash and Financing
The Group's cash performance in the period is ahead of the prior
year and better than our expectations. Given the timing of payments
relating to tax, dividends and interest, we continue to expect the
first half net debt/EBITDA leverage ratio to be at the upper end of
our 0.5x - 1.5x range and the year-end leverage ratio to be lower
than at the prior year end.
On 21 June 2023, we signed a note purchase and guarantee
agreement regarding the proposed private placement of US$300m of
loan notes. Subject to the fulfilment of certain conditions
precedent, proceeds will be used to refinance existing debt of the
Group and for general corporate purposes.
Dividend increase
Keller has an unbroken record of dividend payments, and has
consistently and materially grown its dividend in the 29 years
since listing, clearly demonstrating the Group's ability to
continue to prosper through economic downturns, including both the
global financial crisis and the pandemic. Given the increase in
full year expectations, and in keeping with the Group's progressive
dividend policy, the Board will be announcing a 5% increase in the
interim dividend to 13.9p (2022: 13.2p) as part of the Group's
interim results.
Commenting, Michael Speakman, CEO of Keller Group plc, said:
"The actions we have taken to improve operational execution have
resulted in an increased operating margin and a record performance
in the first half of the year. This significant progress, together
with the increased momentum and our robust order book, gives us the
confidence to increase our expectations for the year. The
underlying strength of the Group's performance provides confidence
in our longer-term prospects and is reflected in the Board's
decision to increase the interim dividend by 5% for the first
half".
For further information, please contact:
Keller Group plc www.keller.com
Michael Speakman, Chief Executive Officer 020 7616 7575
David Burke, Chief Financial Officer
Caroline Crampton, Head of Investor Relations
FTI Consulting
Nick Hasell 020 3727 1340
Matthew O'Keeffe
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 cGBP3bn.
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 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
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END
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