Press releases
Interim Management Statement
13 May 2010
Keller Group plc (“Keller” or “the
Group”), the international ground engineering specialist,
issues its Interim Management Statement covering the period 1
January to 12 May 2010.
Overview
The general economic indicators in most of our geographic
regions are at last starting to turn more positive, although this
has not yet been reflected in a meaningful upturn in many of our
construction markets, which continue to suffer from the most severe
downturn in decades. Whilst demand in Australia and most of our
developing markets is strong, our mature European markets have
remained sluggish and, overall, the US construction market, which
accounts for about 40% of the Group’s revenue, continues to
decline.
This continued deterioration in the US construction market has
led to a further reduction in volumes in our US businesses. More
importantly, the resulting more intense competitive environment has
led to increased pressure on margins, which is likely to continue
for the remainder of 2010. This, combined with the impact of the
adverse weather conditions in the first quarter, means that the
Board expects the result from the Group’s US businesses in
the first half of 2010 to be around breakeven and the full year US
result to be well below our expectations at the time of announcing
the Group’s 2009 preliminary results. Consequently, the Board
now believes that the Group’s results for the full year will
be significantly below market expectations.
We are, however, beginning to see signs of the Group returning
to revenue growth, although it will be some time before this is
reflected in stronger operating margins. Like-for-like order intake
up to the end of April 2010 was 9% ahead of the same period in 2009
and the order book has increased each month since December 2009. At
the end of April, the order book was 7% below the level at this
time last year, compared with 14% below at the end of January
2010.
Divisional Review
US
In the US, expenditure in the office, commercial and leisure
sector has continued to contract and other market sectors have not
grown sufficiently to take up the slack. Whilst there has been some
benefit from the federal stimulus package, public construction
spend taken as a whole is not growing and private investment in
power and manufacturing has levelled off. Residential construction
is growing only marginally.
As a result of this further decline in the total US construction
market, coupled with the impact of the adverse weather conditions
in the first quarter, our US revenue was significantly down in the
first four months of 2010 against the same period in 2009. We
expect higher activity levels in the remainder of the year,
although margins are not expected to improve until there is
confidence in a sustained recovery in US construction.
Continental Europe, Middle East & Asia (CEMEA)
Across our diverse markets within the CEMEA division,
performance has been mixed. In our developing markets, whilst the
Group’s Middle Eastern businesses have been reasonably quiet,
demand has remained strong in Poland. Our business in Asia has
performed well, with the benefit of a good contribution from
Resource Piling, our October 2009 acquisition based in Singapore.
Elsewhere, market conditions are more challenging.
For the division as a whole, the results in the first half will
be adversely impacted by the severe weather in Northern Europe in
the first quarter. However, the second quarter’s result will
be much improved which bodes well for a good second half.
Australia and UK
Our Australian business has continued to perform well in the
year to date, in a market which remains very buoyant. There are a
large number of significant opportunities in the pipeline in
Australia and we are confident of winning our share.
Although it is operating in one of the most difficult trading
environments, our UK business is profitable and continues to
increase its exposure to major projects.
Financial Position
The Group’s financial position remains strong. Other than
the normal seasonal increase in working capital and the payment of
the second 2009 interim dividend in April, there has been no
significant change to our financial position since the last year
end. The Group’s £65m revolving credit facility which
expires in July 2010 has been extended to March 2011 to allow a
single refinancing of the Group’s two central banking
facilities later this year.
Notice of Interim Results
Keller intends to announce its interim results on Monday, 2
August 2010.
For further information, please contact:
| Keller Group plc |
www.keller.co.uk |
| Justin Atkinson, Chief Executive |
020 7616
7575 |
| James Hind, Finance
Director |
|
|
| Smithfield |
020 7390
4600 |
| Alex Simmons/Will Henderson |
|
A conference call for analysts is to be
held at 08.00 on Thursday, 13 May 2010. Contact Will Henderson at
Smithfield (see above) for dial-in details.