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Keller to axe 700 jobs after £57m hit

Keller is to cut 700 jobs worldwide and incur £57m of restructuring costs following poor performance in Asian markets.

The FTSE 250-listed ground engineer announced the restructuring measures after facing a “deteriorating” market in Asian and Pacific regions.

In a trading statement, the group said it expected to take an exceptional restructuring charge of approximately £57m in its full-year results for 2018, due to be announced 4 March 2019.

Around £30m of the costs will relate to a writedown of goodwill, while some £20m will relate to fixed asset and other impairments.

The firm said: “Restructuring costs in 2018 will be around £7m offset by income from asset disposals in 2019 of around £5m, with a net cash cost therefore of around £2m.

“We estimate these measures will result in a reduction of around 700 employees.”

According to its most recent annual report, Keller had a group-wide workforce of 10,000 as of the end of 2017.

Keller said the business in Europe, Middle East and Africa performed in line with expectations, with growth in EMEA markets offset by challenging market conditions in Brazil and South Africa, “reflecting the geo-political environment in those countries”.

The news of job losses follows on from Keller’s poor performance in the Asian regions.

A previous update in October stated that the firm was re-assessing its options in Asia and expected the Asia-Pacific (APAC) division to make a pre-tax loss of £12m-£15m in 2018, in contrast with the previous expectation of a small profit.

“As a consequence, the group announced it would be conducting a strategic review of its activities in south-east Asia and [subsidiary] Waterway, which account for the APAC losses in the year.”

Keller chief executive Alain Michaelis (pictured) said: “We are taking tough but necessary actions to reduce our cost base and exposure to unprofitable market segments, and we are also sharpening our control regime.

“We continue to focus on improving operational performance and remain well-positioned to address the long-term market trends in our industry.”

Keller’s shares were down 4.1 per cent in morning trading.

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