External factors aside, these results confirm that Keller (KLR) delivers in those areas of its business where it has control. The ground engineering specialist continued to scale up across its business segments, exited the half-year period with a £1bn order book, and hiked the half-year payout by a quarter following the upward rebasing of the 2017 full-year dividend. Management notes “positive tendering activity” overall, although encouraging trends in North America and the Asia-Pacific region, were largely offset by a decrease in the Europe, Middle East & Asia (EMEA) division.
Revenue was 15 per cent to the good at constant currencies, while underlying operating profit increased by 22 per cent on the same basis to £49.1m. Encouragingly, the Asia Pacific segment returned to profit during the second quarter.
A solid operational performance was achieved in the teeth of a particularly savage winter in the northern hemisphere, so the underlying operating margin for the North American operations, which accounts for roughly half of group revenue, contracted by just 10 basis points to 5.9 per cent. About a quarter of the underlying regional growth was attributable to Moretrench, a US business acquired at the end of March 2018. The deal pushed up net debt as a proportion of annualised cash profits to an implied multiple of 1.9, although management expects this to fall to 1.5 by the year-end.
The Bloomberg consensus stands at 99.7p in adjusted EPS for the December year-end, against 102p for 2017.
| KELLER (KLR) | ||||
| ORD PRICE: | 1,098p | MARKET VALUE: | £792m | |
| TOUCH: | 1,096-1,100p | 12-MONTH HIGH: | 1,132p | LOW: 790p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 664p* | NET DEBT: | 76% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 0.99 | 55.2 | 57.0 | 9.7 |
| 2018 | 1.08 | 35.9 | 33.9 | 12.0 |
| % change | +8 | -35 | -41 | +24 |
| Ex-div: | 9 Aug | |||
| Payment: | 3 Sep | |||
| *Includes intangible assets of £188m, or 260p a share | ||||
