Keller boss says 2009 'looks challenging'

Keller had an “excellent year” in 2008 said Justin Atkinson, chief executive, as the global groundwork specialist, unveiled a pre-tax profit of £113m.

Asked about the prospects for the immediate future, Atkinson said: “2009 is looking challenging. Orders in the first two months were 20% down on the same period in the previous year.”

Because Keller is largely operating outside the UK, and provided sterling remains at the same level, then while the group’s turnover might be off by 20%, then the weakening of the currency exchange rate might effectively hand 15% back.

“But it puts pressure on margins,” says Atkinson.

Globally Keller’s two main contributors towards its £1.3bn turnover are USA (44%) and Australia (12%). The UK comes third.

“More people are appearing on tender lists,” says Atkinson. “Sometimes in America there could be as many as 10.

“The best is where we are on a short-list of one and that happens with 10% of our turnover – it is when our products have been specified into the job.”

Keller has already won business as a result of the American government’s stimulus package. This will be good for the group in the medium-term.

“It’s a plus but we won’t see the impact of this until 2010 and onwards, perhaps with a bit at the back-end of this year,” Atkinson calculated.

Much of Keller’s work in the US’s economy stimulus package will be on bridges.

“In Australia we have been building up a presence for the past five years and have become the market leader by some distance,” says Atkinson. “The commercial market has tightened up but the infrastructure market is robust.

“In the UK, 2009 will be difficult. We have housing and commercial exposure in the UK.”

Around 75% of Keller’s work is undertaken for a main contractor, the balance being where it works directly for the client.

“We always do a credit check,” says Atkinson. “In Europe, we run with a trade credit insurance on the main contractor. And yes, that provision is still there.

“When bidding for direct work, we certainly look at the strength of the paymaster."