Keller chief looks to second half after US building slump hits hard

THE head of ground engineering company Keller said profitability would improve in the second half of the year after bad weather and a building slump in the United States tore into the group's first-half profit.

Keller, which laid the foundations for the Olympic stadium in London, said first-half profit shrunk to nearly a quarter of its size this time last year as US public sector spending failed to offset a drop-off in commercial activity.

Revenue from US operations fell to 198m in the first half from 268.0m last year.

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However, a return to profit in the second quarter and an increased order book year-on-year – as well as a pipeline of deal opportunities – is improving sentiment for the global construction group.

"Our profitability in the second half will be significantly better than the first half," said chief executive Justin Atkinson.

"We had a small loss in the first quarter, all of our profit came in the second quarter.

"We will continue at these sort of run rates into the third and fourth quarters," added the chief executive.

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The group issued a profit warning in May due to adverse weather conditions and a slump in US construction activity, with commercial sector activity falling 36 per cent in the period and public sector spending dropping five per cent.

Mr Atkinson said US margins would remain under pressure until the second quarter of 2011 as tough market conditions prevailed both in North America and Western Europe.

Keller reported a pre-tax profit of 11.3m in the six months to end June, compared with 41m last year.

The group's order book was one per cent ahead of the same period last year, boosted by growth in developing markets and Australia.

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Keller, which worked on Dubai's Palm Jumeirah Island – an artificial island on a site reclaimed from the sea in the shape of a palm tree – said net debt rose to 121.5m, from 95.3m a year ago. Dividend is up five per cent to 7.6p per share.

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