Ground engineer Keller (KLR) has said full-year results will be broadly in line with 2007 as growth in the emerging markets and Australia helped to offset weak residential markets in the United States, UK and Spain.
Keller, whose West Midland operations include a foundation support wing employing 200 people near Coventry, said it was confident its strong performance would continue during the year ahead, despite the difficulties apparent in the sector.
Shares in the firm, which have almost halved in value since October on fears of a construction downturn in some of its main markets, responded well to yesterday’s announcement, closing up more than seven per cent at 695p, an increase of 47p.
Keller, which prepares the ground for major construction projects, said profit before tax from continuing operations rose 19 per cent to £54.2 million in the six months to June 30. First-half revenues rose 28 per cent to £568.7 million.
Analysts currently expect the group to report a full-year profit of £100.8 million, down from £103.2 million in 2007.
Chief executive Justin Atkinson said: “It’s a good set of results. We have seen growth in the Middle East, Eastern Europe and Australia – markets in these countries are still doing well.”
In the Middle East, projects in the UAE, Saudi Arabia and Bahrain all performed well, while in Australia Mr Atkinson said the group’s work on a major road and bridge refurbishment project in Queensland had been very lucrative.
He added that opportunities within Australia remained good, boosted by demand for mining-related projects.
While the problems seen in the residential construction markets in the United States, UK and Spain remain a cause of concern, Mr Atkinson said that the sector accounted for a fairly small proportion of group activity and it was cutting costs to cope.
About a third of the group’s US business is exposed to residential markets, mainly through its Suncoast unit, where it has cut staff numbers by about 400, or 40 per cent, over the past 18 months.
He said Suncoast was profitable in the first half of the year and he expected it to remain so in the second.
“We expect the situation in the United States to stay in the doldrums for the rest of the year and that the UK and Spain will continue to struggle,” he said.
“However, excellent momentum in Eastern Europe and the Middle East, together with an exceptionally strong performance in Australia, has further diversified Keller’s profits away from the United States, which in the first half contributed only 39 per cent of operating profit,” he added.
Within the UK he said the group would continue with its programme of investment and would be looking to stimulate organic growth.
In reaction, Dresdner Kleinwort said the better than expected interim results demonstrated the benefit of Keller’s global diversity.
“Non-US profits represented 60 per cent of total profits. This compares to 30 per cent three years ago and since when group profits have more than doubled,” it said in a note. “We take great comfort from the breadth of Keller’s performance. All regions, outside of the US contributed to this but there were particularly strong performances from Eastern Europe.”