- Keller performs ahead of expectations
- Vistry sees no recovery in private sales
- Shares top and tail the mid-cap index
There was mixed news from the construction sector, with groundworks specialist Keller (KLR) delivering a surprise upgrade to its full-year earnings forecast after third-quarter trading exceeded its forecasts while housebuilder Vistry (VTY) issued a downbeat statement saying the usual seasonal recovery in demand failed to come through last quarter.
Keller shares, which were previously down over 20% this year, recouped a good deal of lost ground rallying nearly 14% to 766p, taking them to the top of the FTSE 250 leader board, while at the other end of the index Vistry shares slumped 6% to 682p.
UPGRADE FROM KELLER
As the world’s number one specialist geotechnical contractor, Keller has operations around the world and works on some of the biggest infrastructure projects.
The firm said the positive trading momentum of the first half had continued into the third quarter meaning full-year underlying operating profits would be ‘materially ahead of market expectations’.
According to the company-compiled consensus, analysts are forecasting underlying profits of between £132 million and £134 million for this year against £109 million last year, followed by between £133 million and £148 million of profits next year.
The firm flagged improvements in its US business, including operational gains in foundations and better-than-expected pricing in its Suncoast unbonded post-tension division, for the increase in guidance.
On the other hand, its European business experienced weak demand in residential and commercial construction, with profit margins impacted by a competitive pricing environment and some ‘challenging’ projects, meaning the hoped-for second-half improvement hasn’t materialised.
While the Australian business performed well and the Austral civil engineering division returned to profit as hoped, piling work on the NEOM giga-project in Saudi Arabia has been delayed as the design continues to evolve so the firm is reallocating some of its resources in the region.
MORE CAUTION FROM VISTRY
In contrast to the raised guidance from Keller, housebuilder Vistry said private sales remained subdued even with the use of discounts and it would have to lay off a further 200 people as it reorganized its business.
The firm’s average weekly sales rate continued to decline, from 0.86 units per outlet per week in the first half to 0.60 from the beginning of July and 0.76 for the year to date.
On the plus side, Vistry did reiterate its full-year adjusted pre-tax profit target of £450 million, which it set out at the half-year stage, and confirmed it would go ahead with a share buyback worth up to £55 million between now and the announcement of its full-year results next March.
LEARN MORE ABOUT KELLER AND VISTRY
