22nd Nov 2018 09:38
LONDON (Alliance News) - Keller Group PLC on Thursday said it has refinanced its loan and taken "tough but necessary actions" to address losses.
Overall, Keller said, trading in the second half of 2018 has been in line with its expectations.
In early October, Keller had issued a profit warning, saying it expects its Asia Pacific region to record a GBP12 million to GBP15 million annual loss for 2018, having previously expected to post a small profit.
The geotechnical contractor said Thursday it plans to take action due to deteriorating market conditions in the countries making up the Association of Southeast Asian Nations and will downsize its business in the region.
To this end, a managed exit from heavy foundations activities in Singapore and Malaysia is planned. In combination, these operations contribute approximately GBP60 million to annual revenue but also represent substantially all of the expected ASEAN loss for 2018.
Keller is to focus in its higher-margin ground improvement activities in the ASEAN region in the future, where it holds "a technological competitive advantage".
Waterway, Keller's Australian maritime contractor, will refocus on higher-margin projects and key leadership roles will be shared between Keller's other Australian business and Waterway in order to reduce overheads.
In combination, these measures are expected to return Keller to profit in the Asia Pacific region by the second half of 2019.
In North America, Keller's geotechnical business is in line with expectations and has not suffered in any material way from hurricane Florence or hurricane Michael. However, bad weather in Texas hurt its Suncoast post-tension business, compounding the impact of high steel prices.
In its Europe, Middle East, and Africa region, business is in line with expectation and year-on-year profitable growth has been demonstrated.
Growth in European, Middle Eastern and North African markets has, however, been offset by challenging Brazilian and South African market conditions. Keller said it is "taking proactive measures" to scale back its operations in these tougher markets.
Keller has refinanced its existing debt facilities, which were due to mature in September 2019, having entered into a new GBP375 million syndicated revolving credit facility. This new facility matures November 2023m, with two additional one-year extensions and a GBP200 million accordion.
"We are taking tough but necessary actions to reduce our cost base and exposure to unprofitable market segments, and we are also sharpening our control regime. We continue to focus on improving operational performance and remain well positioned to address the long term market trends in our industry," said Keller Chief Executive Alain Michaelis.
Shares in Keller were down 3.5% at 599.00 pence on Thursday.
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