Revenue was up 8%, representing 15% in constant currency, to £1,075m. Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) was up 7% (15% in constant currency) to £83.5m while underlying operating profit grew 12% (22% in constant currency) to £49.1m.
Keller has approximately 11,000 staff worldwide, operating across three divisions. In North America, there was strong growth in both revenue and profit, despite poor weather in the first quarter. The Europe, Middle East & Asia (EMEA) division saw what the company described as solid performance, with profits maintained despite less revenue from large projects and a harsh winter. Losses were reduced substantially in the Asia-Pacific (APAC) division; the second quarter was profitable second quarter and the order book is described as encouraging.
Overall, the company said that tendering activity remains positive and the order book remains healthy – up 1% excluding the recent completion of the £113m Caspian piling project.
Customer orders have been healthy in the first half of the year and the group order book remains over £1bn, said the company. There have been increases in North America and APAC, largely offset by a decrease in EMEA. The majority of our markets are seen as robust, with bidding activity at a healthy level.
Chief executive Alain Michaelis said: “We remain encouraged by the group’s progress. Despite a harsh northern hemisphere winter, we are reporting a strong financial performance for the first half of the year. Broadly healthy markets, consistent operational delivery and business improvement projects have all contributed to this performance. We remain well positioned to benefit from the global trends of urbanisation and infrastructure growth and we continue to advance our strategic objectives. We are confident of making further progress in the second half.”
The acquisition of Moretrench in the US, organic growth and normal seasonal working capital outflows led to net debt increasing to £367m - representing 1.9x annualised EBITDA. The value is expected to be about 1.5x EBITDA at year end.
North America accounts for about half the group’s revenue. Keller reported strong constant-currency growth in both revenue and underlying profit over what was a relatively weak first half of 2017. About one quarter of this growth was attributable to Moretrench. The underlying operating margin was only slightly down at 5.9%, despite poor weather in the first two months of the year and a reduction in Suncoast’s margin as a result of rising steel prices, said the company. The US construction market as a whole is seen as remaining solid. Total construction spend in the US in the first five months of 2018 was up 4% vs the same period in 2017.
In EMEA, reported revenue declined by 6%, largely as a result of the completion of the £113m Caspian project early in the year. On a constant currency basis, revenue for the division as a whole was down 4%. However, beneath the total divisional picture there was constant currency growth of 11% in Europe, which accounts for around 70% of the division’s 2018 revenue, offset by a reduction in revenues elsewhere, most notably the Caspian region and in the Middle East following the completion of large projects.
In APAC, constant currency revenue was up 34% with significant increases in both Asia and Australia. Following two years of material losses, the division was broadly at break even in the first half, recording a loss of £0.4m, following significant restructuring and rebuilding actions undertaken in the region.