Keller Group PLC on Wednesday said it expects its full-year underlying operating profit to be ‘materially ahead’ of market expectations, though the increase in earnings will be moderated by the latest interest rate hikes.
Shares in Keller were up 7.4% to 756.00 pence each in London early Wednesday, making it one of the best FTSE 250 performers in early trade.
‘Trading in the first half has remained strong and we anticipate a record performance in the period,’ the geotechnical engineering firm said.
Based on this, Keller now expects full year underlying operating profit to be materially ahead of previous market expectations, with the increase in earnings moderated by the impact of recent interest rate increases.
Due to the timing and phasing of certain contracts, it expects profit to be more evenly weighted between the first and second half.
Operational improvements in its North American foundations business have helped to recovery operating margins, and Suncoast is expected to deliver an improved performance despite lower production volumes.
Keller did note challenges from the ‘recessionary backdrop’ in Europe, however, which is causing margin erosion and delays to some projects.
The company also said its cash performance in the period is ahead of the prior year and better than our expectations.
Looking at its dividend, Keller said that given the increase in its full year expectations, and in keeping with its ‘progressive’ dividend policy, the company will be announcing a 5% increase in the interim dividend to 13.9 pence, up from 13.2p a year earlier.
Chief Executive Officer Michael Speakman said: ‘The actions we have taken to improve operational execution have resulted in an increased operating margin and a record performance in the first half of the year. This significant progress, together with the increased momentum and our robust order book, gives us the confidence to increase our expectations for the year.’
Keller plans on publishing its interim results on August 1.
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