REG - Keller Group PLC - Post Close Trading Update

KellerAnnouncement

17/01/2024 07:00

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RNS Number : 9103Z  Keller Group PLC  17 January 2024

 

17 January 2024

Keller Group plc

 

Post Close Trading Update

 

2023 underlying operating profit expected to be significantly ahead of market
expectations(1)

 

Keller Group plc ('Keller' or 'the Group'), the world's largest geotechnical
specialist contractor, issues a post close trading update for the year ended
31 December 2023.

 

The positive trading momentum and strong operational performance seen in the
first nine of months of the year continued in the fourth quarter, with a
particularly strong end to the year. Accordingly, we now expect to report an
underlying operating profit for the year significantly ahead of current market
expectations(1). The underlying operating profit margin for the year is
expected to be significantly ahead of recent years.

 

In North America, management actions to improve performance in the foundations
business in the second half of 2022 generated a material and sustainable
improvement in operational performance, with a resultant uplift in operating
margin. In addition, the division benefited from better than expected pricing
resilience at Suncoast, which is now unwinding and the contribution from three
large projects in the foundations business that were particularly well
executed and delivered materially higher than normal levels of contract
profitability. These two material, non-recurring benefits are considered
one-off in nature and are not expected to repeat in 2024.

 

In Europe, the macro-economic environment remained a challenge in the second
half, with weak demand and competitive pricing impacting profitability. In
addition, some challenging projects in the Nordic region created a further
drag on margins in the year. As a result of these combined issues, the
division will deliver a full year performance below our original expectations
and we are taking appropriate corrective actions to drive an improved
performance in 2024.

 

In Asia-Pacific, Middle East and Africa (AMEA), Keller Australia is expected
to report a record performance for the year, following very high levels of
demand and improved operational execution. Austral returned to a sustainable
profit in the second half, albeit insufficient to offset the loss experienced
in the first half of the year. At NEOM, we continue to take a measured and
disciplined approach to the opportunities provided by the project. Whilst we
remain in constructive discussions with the client in respect of future work
on The Line, we do not have a current works order and have redeployed
resources in the short term. However, we have recently been awarded a work
package worth c.USD$80m in respect of Trojena, the winter resort development
at NEOM, for which we are currently preparing to mobilise to site with work
expected to be completed by the end of 2024.

 

As a result of the significant increase in underlying operating profits in
North America, the Group's underlying effective tax rate in 2023 is expected
to be c.25%, versus our previous guidance of c.22%.

 

The strong earnings performance, together with the continued focus on working
capital management, is expected to result in the Group's cash generation for
the year being a considerable improvement on the prior year and ahead of our
previous expectations. We expect the year-end net debt/EBITDA leverage ratio
to be c.0.6x, at the lower end of our target range of 0.5x - 1.5x (2022:
1.2x).

 

Commenting, Michael Speakman, CEO of Keller, said:

 

"We are very encouraged by the Group's strong progress in 2023. The
combination of management actions to improve operational performance in
project execution, commercial agility in the face of a dynamic market, and the
one-off  benefits in North America will result in Keller delivering a record
performance in 2023 that has significantly exceeded our original expectations.
The fundamental strengths of the business, together with the continued
positive outlook and our strong order book, give us confidence in further
progress  in 2024."

 

The Group will announce its full year results for 2023 on 5 March 2024.

 

(1) Analyst consensus underlying operating profit for 2023: £150m.

 

 

 

For further information, please contact:

 

 Keller Group plc                               www.keller.com (http://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 c£3bn.

 

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 regulated
information

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