The world’s largest geotechnical specialist contractor, Keller Group PLC (LON:KLR), has warned next month’s first-half results will be “materially lower” than last year’s.
The company, which has laid the foundations for some of the world’s tallest buildings, kept its full-year guidance in place, though, repeating its expectation of a “much stronger” second half.
READ: Keller surges despite 92% fall in profits
That seemed to reassure investors, with shares flat at 707p on Thursday morning.
Bad weather in North America and cyclones in Australia led to a quiet start to 2019 for Keller, while the completion of two large contracts this time last year has made the comparatives a little tougher.
“Overall trading performance in the first four months of 2019 has been lower than anticipated but is on an improving trend,” the group said in a stock exchange announcement.
“This, together with the final completion of our Caspian project in the first half of last year, means that our results for the first half of 2019 will be materially lower compared to the first half of 2018.”
Slow start, strong finish
Bosses are confident in the outlook for the rest of the year, though.
The shortfall in North American and Australia in the weather-affected opening months of 2019 is expected to be recovered in the second half, while the EMEA division is performing as expected despite challenges outside of Europe.
“We continue to expect a much stronger second half, and for full year revenue to be broadly flat on 2018, with an improvement in margin driving a recovery in profit.”
The expected rise in profit means debt leverage will “reduce significantly” by the year end to within Keller’s target range of 1.0-1.5x.
Stock looks cheap
City broker Liberum thinks the shares look cheap, and analysts there have the stock as a ‘buy’ with a price target of 980p.
“There has been a significant de-rating following the APAC warning in October,” read a note to clients.
“Keller now looks very cheap on a 2019 P/E of 7.9x. A 2019 FCF yield of 10.7% also looks attractive. The combination of earnings growth and de-leveraging could drive a significant re-rating.”