Keller Net Income Falls on U.S., Spanish Impairment Charge
Keller Group Plc, the builder of the foundations for the main stadium of London’s 2012 Olympic Games, said full-year profit dropped 78 percent after it wrote down the value of investments in the U.S. and Spain.
Net income fell to 11.2 million pounds ($18.1 million), or 17 pence a share, from 50.4 million pounds, or 77.4 pence, a year earlier, the company said today in a statement. Keller took an impairment charge of 21.8 million pounds, wiping out all of the goodwill balance for Keller-Terra in Spain and one-third of the goodwill for Suncoast in the U.S.
“Markets in the States and Western Europe will remain challenging, but we have the benefit of diversification into Australia and developing markets,” Chief Executive Officer Justin Atkinson said in an interview.
The recovery outlook for the U.S. construction sector, which provides about 40 percent of Keller’s revenue, is better than that of Western Europe, where Atkinson said the company will “have to continue to match our cost-base to our revenue streams.”
Keller has suffered from slowdowns in the U.S. residential market and the construction market in Spain as the global economy recovers from the deepest recession in more than 50 years. Atkinson said it won more contracts in the second half of 2010 than a year earlier, and at the end of January the order book was 13 percent ahead of the previous year.
Keller fell as much as 3.9 percent to 613.5 pence in London trading and was down 0.6 percent as of 9:32 a.m., paring the stock’s gain in six months to 12 percent.
Keller will have a year of recovery in 2011, albeit “a slow one,” the CEO said, as government budget cuts and overcapacity in the U.S. will delay growth in profit margins until the second half.
Australia and developing markets increased to 38 percent of revenue last year as Keller focuses on expanding outside of the depressed Western Europe and U.S. construction markets, it said.
The company will focus on organic investment and revenue growth in its Asian markets of India, Singapore and Malaysia, Atkinson said. Keller is looking to make acquisitions in Brazil where it currently has a joint venture.
“We’ll be disappointed if we don’t make another acquisition in 2011,” Atkinson said. “It will be small-to- medium-sized, less than $50 million funded out of cash.”
Full-year pretax profit before the impairment charge dropped by 47 percent to 39.6 million pounds, while revenue gained 3 percent to 1.07 billion pounds, Keller said.
The company plans to pay a dividend of 22.8 pence a share, compared with 21.75 pence for the same period in 2009.
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