The world’s largest geotechnical specialist contractor, Keller Group PLC (LON:KLR), has surged on Monday morning after guiding for a much-improved 2019.
The company, which has laid the foundations for some of the world’s tallest buildings, reported a 92% fall in pre-tax profit to £8.4mln in 2018, (2017: £110.6mln). Revenue rose 7% to £2.22bn (2017: £2.07bn).
READ: Keller trading in line with full-year expectations
The fall in profitability was largely due to a one-off £61.4mln restructuring charge – bigger than first thought – as it looks to address problems in some of its underperforming businesses.
The completion of two large projects in the Europe, Middle East and Africa (EMEA) business, as well as “significant losses” in the ASEAN and Waterway divisions didn’t help matters.
But bosses said the £1bn order book reflected a more “positive” outlook for 2019, while the market also cheered a better-than-expected net debt of £286.2mln.
City broker Liberum said the reduced net debt showed “strong cash management”.
“In 2019 overall, we expect revenue to be broadly flat with an improvement in margin and a good recovery in profit.
“The profit improvement, together with a focus on cash generation, means we expect debt leverage to reduce significantly by the year end.”
‘Deeply unsatisfactory’
“2018 results were deeply unsatisfactory with an 11% [underlying] profit decline, as a result of which we have acted firmly in restructuring four of our business units,” said chief executive Alan Michaelis.
“In addition, we have continued to build the capability of the group, with the successful acquisition and integration of Moretrench in the US a notable highlight.
“The internal improvement measures, coupled with a stable market outlook, a healthy order book and Keller's leading position in the industry, give us confidence in the outlook for 2019.”
Keller upped its total dividend by 5% to 35.9p.
Shares rose 11.7% to 620p on Monday morning.