Keller warns of post-Brexit dip in UK revenue

The ground engineering specialist is expecting its UK turnover, which makes up 4 per cent of its global revenue, to be “adversely impacted” in Q4 due to a “Brexit-related slowdown”.

Keller chief executive Alain Michaelis told Construction News the company had experienced delays on some projects – particularly in London – as investors assessed the impact of the EU referendum vote.

“It seems foreign investors are trying to see exactly where their investments lie in the post-Brexit environment until they make any decisions [on whether to move forward],” Mr Michaelis said.

However, the CEO was confident the schemes would not be cancelled and said tendering activity in recent weeks had been “ok”.

The comments came as Keller posted global operating profit of £30.9m for the six months to 30 June 2016, down 6 per cent on the £35m posted for the same period of 2015.

Despite the fall in profit, revenue hit a record £849.7m for the half-year, up 12 per cent on H1 2015’s £755.8m.

The fall in profit was largely down to poor performance in the company’s Asia Pacific business, where project delays and “tough market conditions” saw it post losses of £9.6m.

Keller’s Europe, Middle East and Africa business performed well, nearly doubling its operating profit to £13.6m in H1 2016 from £7m in H1 2015. Turnover for the division increased to £261.7m for the period, up 24 per cent from £210.3m.

The UK market was one of its strongest European markets, with Mr Michaelis saying the firm felt “particularly good” about UK performance in the past 12 months.

Keller had a steady order book over the coming months and is targeting work on High Speed 2 and Hinkley, Mr Michaelis said.

He said the company was getting ready for the opportunities a new runway in the South-east could provide, adding that it should be “top of the list” when it comes UK infrastructure projects.

It was now up to the government to make swift decisions on major infrastructure projects to give the sector greater certainty, he said.

“The confidence of the nation is shaky given Brexit, and the industry is not clear on the outcomes of some of these negotiations, so the government should do anything it can to instil confidence through projects within its control.”

The chief executive said that while the weakening of the sterling would likely add nearly £40m to Keller’s net debt compared with the end of 2015, it could also have a beneficial effect on Keller’s profit when translated into sterling over the coming years.

Mr Michaelis said: “The interesting positive affect of Brexit on us will be in currency: we make the majority of our profit in dollars, so that is a good news item for Keller.”


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