Keller Group investors hopeful of better year after ‘deeply unsatisfactory’ 2018 results
Keller Group shares soared 13 per cent on Monday morning despite profits plummeting in 2018, as investors hope it has drawn a line below a difficult restructuring year.
The world’s largest geotechnical specialist contractor embarked on a major reorganisation of its businesses in Malaysia, Singapore, Brazil and South Africa. The move caused more than 700 people to lose their jobs and the company to pay out £61.4m mainly in goodwill write downs and impairments.
The figures
Pre-tax profit plunged to just £8.4m in 2018, falling 92 per cent year-on-year from £110.6m in 2017. Revenues rose seven per cent, however, to £2.2bn from £2.1bn the year hence.
The firm reported net debt of £286.2m, which was better than analyst consensus, but still ballooning by nearly a quarter on 2017’s figure of £229.5m.
Dividend per share rose five per cent from 34.2p at the end of 2017 to 35.9p at the end of last year. Underlying operating profit also fell 11 per cent to £96.6m.
Why it’s interesting
While Britain only represents three per cent of the firm’s overall revenue, it saw a hesitant environment for commercial investment. But the firm said major infrastructure projects like HS2 would see the market for geotechnical work improve significantly towards the end of 2019 and continue well into the following years.
Chief executive Alain Michaelis said the group had taken resolute steps to combat adverse market conditions in 2018, involving closing its foundations business in Singapore and Malaysia, restructuring its Waterway business in Australia and diminishing its operations in Brazil and Africa.
The firm employs more than 10,000 people across 40 countries, with 47 per cent of its revenue coming from its North American business. Profits were flat in the region, with the benefit of the acquisition of US constructor Moretrench offset by an "adverse mix of projects".
What Keller said
Michaelis said: “2018 results were deeply unsatisfactory with an 11 per cent profit decline, as a result of which we have acted firmly in restructuring four of our business units.
“In addition we have continued to build the capability of the group, with the successful acquisition and integration of Moretrench in the US a notable highlight.
“The internal improvement measures, coupled with a stable market outlook, a healthy order book and Keller’s leading position in the industry, give us confidence in the outlook for 2019.