REG - Keller Group PLC - Trading Update

KellerAnnouncement

17/11/2022 07:01

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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

                                                     (file:///C%3A/Users/k.porritt/AppData/Local/GHO%20Finance%20Shared%20Files/2019/Interim/Back%20half%20accounts/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                                        020 3727 1340

 Nick Hasell / 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 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

 

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