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Keller CEO ‘bearish’ on UK market outlook

Keller chief executive Alain Michaelis has said he is “bearish” in his UK market outlook for the next 12 months.

Speaking to Construction News this morning following the release of Keller’s half-year results, Mr Michaelis said the UK was having “a quiet year in a difficult market”.

“We’re relatively bearish on the UK at the moment. We’re being cautious there,” he said.

Business confidence was lacking due to political uncertainty that was holding back investment, according to Mr Michaelis.

“Foreign investment is going to be thinking twice about the UK until we have a bit more political certainty,” he said.

One major opportunity for Keller is HS2, which Mr Michaelis said would increase the market for geotechnical work in the UK by a third once work commenced.

Keller’s results for the six months to 30 June reported underlying profit before tax of £42.2m, up from £39.3m in the same period of 2017, while revenue also rose to £1.08bn from £991m.

Statutory pre-tax profit was fell to £35.9m, down from £55.2m in H1 2017 when the firm booked a £21m credit following the sale of a problem warehouse project in Avonmouth.

Mr Michaelis said he was “pretty pleased” with Keller’s results for the first six months, against the backdrop of bad weather in Europe and North America during Q1 2018.

Growth was being driven by activity in the North American and Asia-Pacific markets, where revenue was up 23 per cent and 34 per cent respectively in the first half.

Revenue from Europe and the Middle East fell 4 per cent, though this was partly due to a large project in the Caspian region being completed at the start of 2018.

In March Keller bought US geotechnical contractor Moretrench for $90m (£64m), which contributed to net debt rising from £297.3m at the end of June 2017 to £367m at the end of June 2018.

Mr Michaelis said he was “comfortable” with the company’s debt level and that while Keller would look to reduce its debt relative to EBITDA, it would not hold back from making further acquisitions.

He said the company would target one deal of a similar value to its Moretrench acquisition, or two deals with a similar combined value, each year, which it plans to fund from its own cashflow.

Keller’s recent takeover activity has been focused in North America, and Mr Michaelis said any future acquisitions were more likely to be in “mature” markets rather than emerging ones.

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