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Fri March 22 2019

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Restructuring costs hit Keller hard

4 Mar Corporate restructuring at ground engineering contractor Keller Group resulted in a statutory loss after tax of £13.8m for 2018, compared to an £87.5m profit in 2017.

Keller worked on roughly 7,000 different projects in 2018
Keller worked on roughly 7,000 different projects in 2018

Keller has closed its heavy foundations business in Singapore and Malaysia, restructured its Waterway business in Australia and downsized its operations in Brazil and Africa in response to adverse market conditions.

The Keller board said that actions to address underperforming business units have now been implemented. It resulted in an exceptional group restructuring charge of £61.4m in the 2018 accounts, comprised of a £30.1m impairment of goodwill, £22.8m of other impairments, and a cash restructuring charge of £8.5m. 

However, even at an underlying level, operating profit was down 11% to £96.6m (2017: £108.7m) on revenue up 7% to £2.22bn (2017: £2.07bn). Half of the revenue growth was attributable to the acquisition of US groundwater control specialist Moretrench.

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A revenue decline is expected in 2019 as a result of the decision to exit ASEAN heavy foundations.

Chief executive Alain Michaelis said: "2018 results were deeply unsatisfactory with an 11% profit decline, as a result of which we have acted firmly in restructuring four of our business units. 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 worked on around 7,000 projects throughout the world in 2018. The UK represents only 3% of overall group revenue. However as major infrastructure projects are developing in the UK, including HS2, it expects the UK market for geotechnical work to pick up noticeably towards the end of 2019, extending into 2020 and 2021.


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