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UPDATE 1-Keller Group profit jumps as U.S. housing recovers
March 3, 2014 / 9:31 AM / 4 years ago

UPDATE 1-Keller Group profit jumps as U.S. housing recovers

* Full-year 2013 profit rises 70 pct

* U.S. housing starts highest since 2007

* Subdued demand in Europe, Australia to weigh in 2014

* Shares fall in line with FTSE-250

March 3 (Reuters) - British construction company Keller Group Plc posted a 70 percent jump in full-year profit after housing starts in the United States, its largest market by far, rose to their highest since 2007.

The company, which lays foundations for infrastructure, industrial, commercial and residential projects, said it expects further growth in 2014 despite extreme weather in North America in the first two months of the year.

But subdued demand in Europe and Australia, where resource-related projects have lost momentum, took some of the gloss off the company’s outlook for 2014.

Liberum analysts wrote in a note that construction in Europe, the Middle East and Africa was “stable but showing few signs of green shoots”.

“Australia is being supported by a strong performance at the large Wheatstone contract but remains uncertain beyond that,” they wrote in a note after Keller reported its results.

The company, along with Bechtel Australia Pty Ltd, has a piling installation contract for the Chevron-operated Wheatstone liquefied natural gas plant in Western Australia.

Shares of Keller, which laid the foundations for London’s Olympic stadium, have risen more than 60 percent in the 12 months to Friday’s close on the London Stock Exchange.

Keller said the main driver of growth last year was the improving American residential market, with U.S. housing starts up 17 percent. Revenue from North America, which accounted for nearly half of the company’s total revenue, rose 20 percent.

Revenue from Europe, the Middle East and Africa rose 11 percent, while revenue from Asia - including Australia - fell 23 percent.

Keller said its pretax profit rose to 74.1 million pounds ($124.2 million) in the year ended Dec. 31, from 43.5 million pounds a year earlier.

Revenue rose 9 percent to 1.4 billion pounds.

Operating margins rose to 5.4 percent from 3.7 percent, helped in part by strong margins on several large projects.

Keller recommended a final dividend of 16 pence per share, taking its total full-year dividend to 24 pence.

Shares of the company were down 1.6 percent at 1250 pence on Monday morning, in line with a broader decline in the FTSE-250 Midcap Index, of which Keller is a part.

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