Keller Group shares surge as FTSE 250 group predicts ‘record year’
- London-based Keller Group saw its shares rise 14% around lunchtime on Monday
- Some of the major projects it has worked on include the Elizabeth Line in London
Keller Group shares topped the FTSE 250 on Monday after the company said it was on course for a ‘record year’.
The world’s largest geotechnical specialist contractor saw its share price rise 14.4 per cent to £7.70 at lunchtime after telling investors that annual underlying profits would be ‘significantly higher’ than market expectations.
Keller said strong demand in the first half has maintained momentum, with solid performance in North America and the Asia Pacific, Middle East and Africa region.
Forecast: Keller Group, the world’s largest geotechnical specialty contractor, said annual underlying profits would be ‘significantly higher’ than market expectations
Operating margins in the former area showed a “more progressive” recovery than expected, supported by robust pricing levels in the Suncoast subsidiary and “continued operational improvements” in the foundation segment.
Trading in the latter region was boosted by Australian company Austral returning to profit in the third quarter amid healthy orders from the infrastructure sector.
By comparison, Keller’s European division has been hit hard by a slowdown in the residential and commercial sectors, which have been hit by high inflation and interest rates.
But profitability was affected by a “competitive pricing environment,” difficulties on some projects and the failure to repeat several large-scale projects from the previous year, Keller said.
Nevertheless, Keller CEO Michael Speakman said the overall performance “reflects continued dynamism and operational improvements within the business, and the excellent contribution of colleagues across the group.”
Brokers Liberum and Investec have increased their price targets for Keller to 1,400p and 1,250p respectively after the latest trading update.
Based in London, Keller’s origins date back to Renchen, Germany, in 1860, when Johann Keller founded a pump and well construction company.
Major projects the company has worked on include London’s Elizabeth Line, the Thames Tideway Tunnel and the ExCel exhibition center extension.
Outside the British capital, it is helping to build the world’s largest polyhalite mine in North Yorkshire, the new stadium for US football franchise Dallas Cowboys, and Zayed City, an urban development scheme in Abu Dhabi.
Keller reported that sales rose by almost a third to £2.9 billion last year, while underlying operating profit rose 23 percent to £108.6 million, despite controversy over the Austral facility.
An internal investigation found that two senior employees had committed financial reporting fraud by overstating the division’s performance since 2019.
The saga caused an estimated £7.3 million impact on the company’s operating profits in the first half of 2022, as well as a cumulative impact of £11 million over the four previous years.