REG - Keller Group PLC - Trading Update

KellerAnnouncement

05/07/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230705:nRSE9745Ea&default-theme=true

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
(c£40m). 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 (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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTRIMRTMTIMBFJ