Keller today announces a trading update ahead of the announcement of its interim results for the half year ended 26 June 2022 scheduled for 2 August 2022.
Major new contract
Keller is one of a small number of geotechnical contractors to have been selected to undertake work on the prestigious NEOM Giga project in the Tabuk Province of North West Saudi Arabia. The first element of the NEOM project is ‘The Line’, a 170-kilometre-long mega-city, starting in the west at the Gulf of Aqaba, continuing through the Sharma Valley and terminating at the NEOM International Airport within the upper valley region. The Line is subdivided into approximately 135 modules, each containing eight buildings founded on large diameter bored piles. Keller has signed an umbrella Framework Agreement in respect of the project, and is mobilising for an anticipated first works order on a portion of Module 40 which has an expected value to Keller of around £50m, with the work anticipated to be completed within the next twelve months. Further works orders are expected to be awarded later in the year on subsequent modules. We have a longstanding presence in Saudi Arabia and we are delighted to have been invited to participate in NEOM, a world class construction project. Following the signing of the Framework Agreement Keller is very well positioned to participate in the future geotechnical work, with the potential to generate contract revenues in the hundreds of million pounds in future years.
Trading update
The Group is trading as anticipated in the first half of the year and the Board's expectations for the full year remain unchanged. As previously indicated, we expect 2022 to be a year of growth, with full year performance to have the customary second half weighting, and to reflect our usual increase in trading momentum as the year progresses. As previously highlighted, across the Group we have successfully passed on a significant portion of cost increases in the form of higher prices, preserving the absolute level of profitability, whilst the relative measure has been affected by materials shortages, the residual unrecovered inflation and the dilution effect of the material costs passed through to clients.
Our record order book continues to strengthen in terms of volume and quality and is expected to be around £1.5bn at the half year, increasing our confidence as we enter the second half of the year and illustrating the Group’s resilience in the current environment. As well as NEOM, there have been a number of recent contract awards and current prospects in the energy and infrastructure sectors across the Group are encouraging. In particular, as a result of the political migration away from dependency on Russian hydrocarbons, there is a resurgence globally in Liquified Natural Gas (LNG) activity, where Keller has both a well-established presence and an excellent reputation. With its focus on US Gulf Coast LNG projects, our recent RECON acquisition continues to perform very well and ahead of our expectations, and we are confident of both new LNG contract awards and the restart of currently suspended projects.
Strategy update
The Group continues to implement its strategy to be the preferred international geotechnical specialist contractor focused on sustainable markets and attractive projects, generating long term value for our stakeholders. During 2020 and 2021 we made considerable progress rationalising and restructuring the Group’s geographic and service activities to create a more focused, higher quality portfolio. We continue to refine our South West Europe and our Middle East and Africa business units, both of which still retain a legacy of geographically dispersed locations which will benefit from further rationalisation and reorganisation.
Dividend increase
The Board recognises the importance of capital returns to our shareholders and Keller has consistently and materially grown its dividend in the 27 years since listing. This unbroken record of dividends clearly demonstrates the Group’s ability to continue to prosper through economic downturns, including both the global financial crises and the pandemic. In the recent AGM trading statement, the Board stated that it would be reviewing the progression of the dividend. Accordingly, the Board is announcing a 5% increase in the interim dividend to 13.2p (2021: 12.6p) as part of the Group’s interim results. The Board will also be reviewing a further increase to the final dividend in respect of the current year as part of the Group’s return to a progressive dividend policy, as well as reviewing other options for capital returns.
Keller continues to deliver strong, resilient cash generation. The net debt to EBITDA (IAS 17 basis) leverage ratio at the half year is expected to be around 1.2x, with an intention that this reduces to below 1.0x at the year end.
Commenting, Michael Speakman, CEO Keller Group plc said:
“Our delivery in line with our first half expectations and the Group’s record and growing £1.5bn order book provides confidence for our performance in the second half and delivering on our expectations for the full year. Our involvement in the prestigious NEOM project, together with a number of recent infrastructure and LNG contract wins, evidences the diversity and inherent resilience of the Group across the macroeconomic cycle. The underlying strength of the Group’s performance provides confidence in our longer-term prospects and is reflected in the Board’s decision to recommence the progressive dividend policy with a 5% increase in the interim dividend for the first half of 2022.”
For further information, please contact:
Keller Group plc
Michael Speakman, Chief Executive Officer
David Burke, Chief Financial Officer
Caroline Crampton, Head of Investor Relations
www.keller.com
020 7616 7575
FTI Consulting
Nick Hasell
Matthew O’Keeffe
020 3727 1340
Notes to editors
Keller is the world's largest geotechnical specialist contractor providing a wide portfolio of advanced foundation and ground improvement techniques used across the entire construction sector. With around 10,000 staff and operations across five continents, Keller tackles an unrivalled 6,000 projects every year, generating annual revenue of more than £2bn.
Cautionary statements
This document contains certain 'forward-looking statements' with respect to Keller's financial condition, results of operations and business and certain of Keller's plans and objectives with respect to these items.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably possible', 'targets', 'goal' or 'estimates'. By their very nature forward looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies and markets in which the Group operates; changes in the regulatory and competition frameworks in which the Group operates; the impact of legal or other proceedings against or which affect the Group; and changes in interest and exchange rates. For a more detailed description of these risks, uncertainties and other factors, please see the Principal risks and uncertainties section of the Strategic report in the Annual Report and Accounts. All written or verbal forward looking-statements, made in this document or made subsequently, which are attributable to Keller or any other member of the Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Keller does not intend to update these forward-looking statements. Nothing in this document should be regarded as a profits forecast. This document is not an offer to sell, exchange or transfer any securities of Keller Group plc or any of its subsidiaries and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction. Securities may not be offered, sold or transferred in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act of 1933 (as amended).