Keller Group has reported more than double its profit due to strong performance in the US market. However, the cancellation of HS2 phase 2a may impact the UK market.
- The company’s pre-tax profit soared to £95.3m, contrasting significantly with the £43.1m from the prior year.
- Keller’s net debt reduced significantly, alongside modest turnover growth to £1.49bn, bolstered by North American demand.
- CEO Michael Speakman highlights increased US construction spending driven by technological reshoring, while cautioning about the competitive UK market.
- The potential shrinkage of the UK market depends on government actions, warns Speakman.
Keller Group, a ground engineering contractor primarily operating in the United States, has reported impressive interim financial results for the first half of 2024, revealing a pre-tax profit of £95.3 million. This figure starkly contrasts with the £43.1 million reported during the same timeframe in 2023. Moreover, Keller’s net debt has markedly decreased by 40 per cent to £199 million, while turnover experienced a modest increase to £1.49 billion. The significant upswing in profitability is largely attributable to heightened activity in North America.
Keller’s Chief Executive, Michael Speakman, has underscored the substantial growth within the US market, particularly highlighting the influence of the technology sector. He cited the reshoring of technologies and manufacturing capabilities as key factors boosting construction demand in the region. Speakman stated, ‘All of these things are feeding into construction spend – you don’t quite have the same phenomenon in Europe.’
In stark contrast, Speakman expressed concerns over the European market, including the UK. While acknowledging the UK market’s relative strength compared to its continental counterparts, he stressed the challenges posed by reduced residential spending and increased competition across diverse sectors. Speakman conveyed optimism regarding potential market share gains in the UK but warned of contraction risks due to the HS2 project’s downsizing.
The UK’s HS2 high-speed rail project faced significant setbacks after the government’s decision to cancel phase 2a. Speakman noted that, ‘With HS2 rolling off the market, I think the whole UK market will probably get a little bit more competitive and may shrink a little bit.’ This sentiment suggests heightened competition amid a potentially diminishing market landscape, contingent upon the new Labour government’s strategic direction.
Despite these concerns, Keller’s outlook remains buoyant, supported by a record £1.6 billion order book and an increased interim dividend. Speakman anticipates that the company’s annual performance will exceed market expectations significantly, given its robust half-year results. The call for governmental long-term infrastructure planning underscores the firm’s strategy to maintain and enhance investor confidence and market stability.
Keller’s future hinges on US market strength and UK government actions post-HS2 cancellation.
