Keller Group unveil record £40m interim pre-tax profit

Keller’s interim pre-tax profit surged to a record £40m. The international ground engineer points to a full-year profit that will “significantly exceed” last year’s £84m figure.

Justin Atkinson, chief executive, said: “The interims are a great set of results. The momentum of the past two years has continued, with further margin enhancement and an impressive contribution from all our recent acquisitions.”

Financial results (six months to 30 June) show turnover running to £470m (figure in comparable period last year: £450m). The latest profit margin of 5.5% was ahead of the 4.5% figure last year, when Keller’s interim pre-tax profit ran to £33m.

Cash generation from operations increased to £40m, compared with last year’s £29m.

The period-end net debt was £54m, which compares to £48um at the end of June 2006. This modest change is after a spend of £30m on acquisitions plus a capital expenditure of £38m, more than twice the group’s annual depreciation figure, reflecting an investment for future growth.

Keller has transformed itself into a major global player. Turnover figures from its four operating divisions were: North America £230m; Continental Europe & Overseas £140m; UK £60m; and Australia £40m.

The most profitable division was North America with an operating profit of £28m.

“Overall, the US construction market was 3% down in the first half,” said Atkinson.

“That divides between the residential sector which was 18% down and the non-residential which was 15% up. Keller’s US business is 80% non-residential with just being 20% in the residential market.

“To date, we’ve not seen the downturn in one part having any real effect on the other and Keller’s US orderbook is strong.”

In the UK, Keller announced that it has given up on its efforts to return its Makers subsidiary to sustainable profitability. Results continue to yo-yo, with a further £5.3m operating loss in the latest period.

It proved to be the last straw and the board has decided to pull the plug. After concluding that an overall sale is unlikely to be achieved, Makers’ various divisions are being sold separately or discontinued. As a result, there will be a one-off charge of £10m in the second half as a result.

By contrast, Keller’s two latest UK bolt-on acquisitions are doing well. They are Phi, a retaining wall specialist acquired in April 2006, and Systems Geotechnique, bought four months ago.