Keller announces fall in trading

Groundworks specialist Keller has announced a fall in trading and the retirement of chairman Michael West.

In the six months to 30 June 2009, pre-tax profit fell 24% from £54.2m to £41m and turnover dropped 3% from £568.7m to £552.6m.

Justin Atkinson, chief executive said: “Whilst there are a few encouraging signs, conditions in most of our markets remain tough. However, I am confident that over the longer term we will emerge from these difficult conditions in good shape, to take full advantage of the upturn in our markets when it comes.”

Chairman West will be replaced by non-executive director Roy Franklin.

Net debt at 30 June 2009 was £95.3m, compared to £74.4m the previous year and the company has more than £100m of unused banking facilities.

Given Keller’s early cycle involvement in projects, many look to what it says as an indication of the future market. Below is a summary.

US

Turnover: £268m (2008: £245.5m). On a constant currency basis turnover was 17% down.

“Overall, the value of US non-residential construction spending was broadly flat year-on-year, underpinned by strong public expenditure and continued growth in the power and industrial sectors. A fall of 20% in the commercial sector and continued depression in the residential sector came as no surprise.”

Continental Europe, Middle East and Asia

Turnover: £191.1m (£204.4m)

On the Middle East: “For the past nine months, tendering activity across the region has remained high, but contract awards have been scarce. Here, as in other parts of the world, our ability to perform small and medium-sized contracts economically is a real strength at a time when many larger contracts remain on the drawing board. Whilst the Dubai market remains very quiet, some opportunities are still to be found elsewhere in the region.”

UK

Turnover £30.7m (£44.8m)

“Overall, the UK market showed few signs of improvement in the first six months of this year, with the recession impacting in particular on smaller schemes on which our UK business has been largely dependent in the past. Although the level of enquiries from house builders is picking up, it is still too early to report a sustained rebound in the housing sector, from which historically Keller UK derived around a third of its revenue.”

The company added: “There is currently nothing to indicate any increase in privately-financed construction project starts and in some of our markets, particularly the US, we expect to see further deterioration in the commercial sector. We still anticipate that economic stimulus packages will benefit us to some degree, but we do not expect these to have a major impact this year.”