Ground engineering specialist Keller (KLR) revealed it is being sued as part of a dispute arising from some work it completed in 2008. The company vigorously denies the claims, but has decided to book a £30m exceptional charge just in case - though this does not take into account potential recoveries under its insurance policies.
Otherwise, things are looking up for Keller. Without the now-familiar negative currency effects, total revenues would have climbed a third, thanks mainly to strong organic growth, but also to some minor acquisitions. In Keller’s key market, the US, construction activities were better than expected, helping the group overcome terrible weather in the first quarter. Combined with some self-help initiatives, this contributed to a minor uplift in Keller’s group-wide adjusted operating margin to 4.5 per cent (from 4.4 per cent a year ago).
However, Keller continues to face headwinds in its third biggest market, Australia, where the resources sector remains subdued. And it’s a similar story in Canada, where oil sands developments have stalled. Looking ahead to next year, chief executive Justin Atkinson doesn't "foresee any real change in Europe" just yet, but expects growth in the US, Africa and Asia to make up for lacklustre performance elsewhere.
Broker Liberum has pencilled in full-year adjusted EPS of 80.1p, rising to 88.9p next year (from 71.9p in 2013).
KELLER (KLR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 916p | MARKET VALUE: | £ 653m | |
| TOUCH: | 914-916p | 12-MONTH HIGH: | 1,299p | LOW: 852p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 43 | |
| NET ASSET VALUE: | 484p* | NET DEBT: | 46% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 645 | 17.4 | 13.6 | 8.0 |
| 2014 | 788 | 4.9 | -8.3 | 8.4 |
| % change | +22 | -72 | - | +5 |
Ex-div: 13 Aug Payment: 5 Sep Includes intangible assets of £178m, or 250p a share | ||||
