The interim management statement from Keller Group covers the year to date. “As expected, we have seen no easing of the challenges facing our industry in the first few months of this year,” said the company. “There has not been any meaningful recovery in our construction markets in the US and Western Europe, which were most severely impacted by the global recession. Over capacity remains a significant issue, particularly in the US, putting continued pressure on margins.”
Total revenue in the first four months was ahead of the same period last year. Order intake remains robust and the order book at the end of April was 9% ahead of 2010, according to the company. “We therefore still expect to deliver solid revenue growth over the full year.”
The impact of lower margins in the US, combined with the Australian floods and geopolitical issues in the Middle East and North Africa, mean that the board now expects that the Group's earnings before interest and taxes for the year as a whole will be around 10% below that in 2010. The second half is expected to be broadly in line with last year.
“Despite this, the board remains convinced that the outlook for global construction remains positive and that Keller is well placed to take full advantage of opportunities both in its developing markets and in its mature markets as these recover,” said the company.
In the US, expenditure in all sectors of the construction market continued to fall in the first three months of the year, most markedly the private non-residential sector, which contracted year-on-year by a further 12% in the period.
In the continental Europe, Middle East and Asia division, performance has been varied. Demand has remained very strong in Poland and in South East Asia, where the businesses have performed very well. The businesses in the Middle East and North Africa have been severely disrupted by the civil unrest in many parts of these regions and, as a result, have made a loss in the first four months of the year.
The western European markets remain challenging but stable and trading in these regions has been as anticipated at the start of the year.
The Australian construction market as a whole is experiencing something of a temporary lull. Activity levels should pick up towards the end of the year, said Keller, as some of the larger, resource-related projects currently being tendered come on stream.
The results of the Australian business for the first four months were adversely impacted by the flooding in Queensland, the effects of which proved to be longer lasting than had anticipated at the time of the full-year results in February. However, the fundamentals of the business remain very good, believed Keller.
The UK business has, as Keller expected, had a difficult year to date, but is expected to have a better second half, as some transport infrastructure projects in which it will be involved get under way.
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