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Keller, the ground work specialist, added a lot of cheer by forecasting that full-year operating profits will be ahead of last year's record numbers. Figures for the first half certainly provide some encouragement, with operating margins up from 7.9 per cent at this stage last year to a record 9 per cent.
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The success story has come from the US, where unlike in the UK, construction companies tend to outsource ground work operations. The US market is important as it accounts for half group turnover and 70 per cent of operating profits. Turnover rose by 6 per cent in dollar terms, although the weakness of the US currency turned this into a 3 per cent decline in sterling terms. The order book remains very strong despite the ongoing weakness in the US residential market, and includes project work on the Chicago Spire, a 610 metre high tower.
However, while full-year operating profits are set to beat last year's performance, profits at the pre-tax level will suffer as a result of an estimated £10m write-down related to the closure of UK-based Makers, the group's only non-ground engineering unit. Trading has gone from bad to worse at the fit-out and cladding specialist, with operating losses deepening ten-fold to £5.3m.
After adjusting for closure costs, broker Altium Securities expects full-year pre-tax profits of £80.7m and EPS of 76.9p (£78.7m and 71.5p in 2006).
| KELLER(KLR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 900p | MARKET VALUE: | £596m | |
| TOUCH: | 899-900p | 12-MONTH HIGH: | 1,133p | LOW: 646p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 259p* | NET DEBT: | 30% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 450 | 33.4 | 30.3 | 4.2 |
| 2007 | 465 | 40.1 | 37.2 | 6.0 |
| % change | +3 | +20 | +23 | +43 |
Ex-div: 5 Oct Payment:1 Nov *Includes intangible assets of £64m, or 96p a share |
||||
Keller boasts a record order book, and trading on a forward PE ratio of under 12, the shares continue to offer good value.
Last IC view: Good value, 1,058p, 22 Jun 2007
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
