Keller raises earnings outlook but reveals ‘corrective actions’ in Europe

“Accordingly, the anticipated profitability improvement in the second half will be less than expected and, as a result, we are taking appropriate corrective actions,” Keller said.

The group’s larger North American arm is enjoying a strong performance by “resilient pricing” in its Suncoast business and “sustained operational improvements” in the foundations business, while trading has also been robust across its Asia-Pacific, Middle East and Africa (AMEA) division.

Michael Speakman, chief executive of Keller, said: “The Keller team has built on an exceptionally strong first half to deliver a better than expected third-quarter performance, and consequently we now expect full-year underlying profit to be materially ahead of current market expectations.”

The group’s difficulties in the UK and European business come as the construction sector has been knocked due to wider economic worries as well as a long run of interest rate hikes which have taken their toll on the residential and commercial property sectors.

It said at the half-year stage that it was hoping for a recovery in the region over the second half due to what it hoped would be more profitable projects coming on stream.

But the third quarter update revealed the recovery has not been as strong as expected.

Originally founded in Germany in 1860, Keller is now headquartered in London and is the world’s largest geotechnical specialist contractor, with about 10,000 staff and worldwide annual revenues of around £3bn.

It has operations across five continents.

The UK’s construction sector contracted heavily last month as the housebuilding sector had one of its worst months since 2009, according to a survey published in early October.

Companies said that projects to build homes were being cut back as demand weakens and the cost of borrowing rises.

“Output levels declined across the UK construction sector for the first time in three months during September and the latest downturn marked the worst overall performance since the early stages of the pandemic,” said Tim Moore, economics director at S&P Global Market Intelligence.

The latest S&P Global/CIPS construction purchasing managers’ index scored 45.0 in September, a steep drop from 50.8 in August. Economists had expected it to reach 50.0.

“A rapid decline in housebuilding activity acted as a major drag on workloads, with construction companies widely commenting on cutbacks to new residential development projects in the wake of sluggish demand and rising borrowing costs,” Mr Moore said in early October.