Bad weather in North America at the start of Keller's (KLR) financial year hampered progress in the region, significantly cutting foundation business revenues here against the prior first half. Residential construction in the US is down, and the geotechnical solutions specialist’s Canada business is also underperforming, the group admits. Nevertheless, its North American order book is up 8 per cent, and while Keller reorganises the division from seven foundation businesses into one, it expects momentum generated in the second quarter to swing the group into a stronger second half in line with its full-year expectations.
Keller is reorganising elsewhere, and these efforts are expected to kickstart growth. Its Asia Pacific wing, which is being reworked, experienced a 35 per cent revenue decline over the period, but the company expects the business to return to profitability in the second half. “Sometimes we get into positions where markets move away from us quite quickly,” chief executive Alain Michaelis said, “and perhaps for a longer period, that we therefore are not confident in being able to sustain a profitable position.”
Measures to cut costs and exit problematic markets are on the table. Keller announced in June that its Australian Waterway business would cease operations from October 2019, “in response to no material improvement in the award of quality contracts”.
Broker Peel Hunt forecasts full-year 2019 pre-tax profits of £93m and earnings per share of 91.9p, rising to £108m and 106p in 2020.
| KELLER (KLR) | ||||
| ORD PRICE: | 665p | MARKET VALUE: | £479m | |
| TOUCH: | 663-666p | 12-MONTH HIGH: | 1,132p | LOW: 463p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 595p* | NET DEBT: | 97% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.08 | 35.9 | 33.9 | 12.0 |
| 2019 | 1.09 | 21.7 | 4.8 | 12.6 |
| % change | +1 | -40 | -86 | +5 |
| Ex-div: | 22 Aug | |||
| Payment: | 16 Sep | |||
| *Includes intangible assets of £153m, or 212p a share | ||||
