A 17 per cent increase in US housing starts underpinned record revenues for Keller (KLR) last year. Moreover, the group’s ability to deal with any cyclic downturns in ground engineering has been bolstered by improving margins and cashflow.
This is borne out by last year’s operating margin of 5.4 per cent, up from 3.7 per cent in 2012 and reflecting improvements across all four divisions. As a result, operating profits were up by 16 per cent to £51.6m. Last year's step-up puts Keller a long way towards achieving its average margin target of 6.5 per cent.
Net debt nearly trebled to £144m on the back of two Canadian acquisitions that increased Keller’s exposure to North America’s unconventional energy sector. But the group's gearing remains modest and cash conversion strong, so funding is not a concern.
With almost half of group revenues generated in North America, the continued recovery in the US residential market gives cause for optimism. Elsewhere, however, the outlook is mixed. Revenue from the EMEA regions increased by 11 per cent over the year, but fell by just under a fifth in Keller’s East Asian markets, which include Australia. Keller will continue to draw in substantial revenues from the Wheatstone LNG development in Western Australia during 2014, but beyond that the situation remains unclear.
| KELLER (KLR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,253p | MARKET VALUE: | £0.9bn | |
| TOUCH: | 1,247-1,256p | 12-MONTH HIGH: | 1,299p | LOW: 747p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 519p* | NET DEBT: | 39% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.0 | 74.7 | 78.8 | 21.8 |
| 2010 | 1.1 | 17.8 | 44.0 | 22.8 |
| 2011 | 1.2 | 21.9 | 24.8 | 22.8 |
| 2012 | 1.3 | 43.5 | 45.9 | 22.8 |
| 2013 | 1.4 | 52.0 | 43.2 | 24.0 |
| % change | +8 | +20 | -6 | +5 |
Ex-div:04 Jun Payment:13 Jun *Includes intangible assets of £188m, or 265p a share | ||||
