Its latest half-year results are in line with the board’s full year expectations, said the company. The group-wide outlook for 2019 is somewhat mixed, with main markets remaining healthy and a sound order book, but lower contributions ahead from some major projects.
In the Asia Pacific region, it has undertaken a strategic review to address losses in the ASEAN and Waterway divisions. The actions being taken there and also in the difficult Brazil and South Africa markets are part of a group-wide programme. The group currently expects to take an exceptional restructuring charge of approximately £57m in its full-year 2018 results. It estimates the measures being taken will result in a reduction of around 700 employees.
Chief executive Alain Michaelis said: “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.”
Keller is refocusing its activities in Singapore and Malaysia in particular. “We are downsizing the business to focus on those product lines offering the greatest opportunity to leverage our market-leading technologies,” it said. “The Group will therefore undertake a managed exit of its heavy foundations activities (bored piling, driven piling and diaphragm walls) in Singapore and Malaysia, which have become highly commoditised and continue to see heavy competitive and pricing pressure.” These operations have a combined annual revenue of approximately £60m and represent substantially all of the expected 2018 loss in the region. “Going forward, we will focus on higher margin ground improvement activities (vibro, grouting and deep soil mixing) in the ASEAN region, where we hold a technological competitive advantage.
It also plans to improve performance by exiting the highly congested bridge superstructure market in the Asia Pacific region, refocusing on higher-margin projects.
The group expects that these measures, along with leadership changes and actions already implemented, will have the combined effect of returning the Asia Pacific region to profit in H2 2019.
In Europe, the Middle East and Asia, its businesses report year-on-year profitable growth. Growth in its core European, Middle Eastern and North African markets has continued to be offset by challenging market conditions in Brazil and South Africa.
In North America, its geotechnical businesses (Hayward Baker, Case, McKinney, HJ, Bencor and Keller Canada) continue to trade in line with expectations and have avoided any material impact from recent hurricanes. The integration of the Moretrench acquisition is progressing very well, it said. Unusually poor weather in Texas in October has adversely affected its post-tensioning business, compounding the previously announced impact of steel price increases.