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Keller suffers despite Aussie boom

Ground engineering specialist Keller has said its growing Australian business has not been enough to offset a weak performance in markets including the UK.

Mining and resources businesses are performing well in Australia amid the government’s Nation Building plan, which will see £21 billion invested in infrastructure between 2009 and 2014.

Keller carries out early works for mining companies in Australia, and in August said it was offering UK staff the chance to transfer to projects in the country.

However, Keller’s markets elsewhere have since weakened and it is making a number of people redundant. The bulk of these are understood to be from non-English speaking countries where transfer to Australia is more difficult.

In a statement to the Stock Exchange last week, Keller said the redundancies had resulted in a £3 million charge during the second half of its financial year, which will end 31 December 2010.

Keller said its markets were still “difficult” and that trading in the four-month period to the end of October was flat compared to the same period last year.

This is a significant improvement on earlier in the year, when sales were 14 per cent lower than a year earlier.

Despite the stabilisation in sales, the firm expects margins to continue to be squeezed. The statement said: “As anticipated at the time of the half-year results, intense competition in the group’s mature markets has meant that margins have remained under pressure.”

The update added: “After taking account of these [redundancy] charges, the board expects the 2010 full-year results to be around the bottom end of the current range of market expectations.”

Keller released a profit warning in May, blaming a weak performance in its biggest market, the US. This hit the firm’s share price, which fell from a high of 785p in the days before the first profit warning to 540p on 19 November.

The 31 per cent fall in share price wiped £160m off Keller’s market value, leaving it worth about £347m.

 

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