Keller Says Year to Beat Forecasts, Shares Up

British ground engineering company Keller Group Plc posted a 20 percent rise in first-half profit.

British ground engineering company Keller Group Plc posted a 20 percent rise in first-half profit and said it was set to report annual profit ahead of forecasts, boosting its shares on Monday.

Chief Executive Justin Atkinson said that with a record order book and rising margins, he expected Keller's full-year pretax profit to rise at least 10 percent from 83.7 million pounds ($165 million) in 2006/07.

Analysts had been expecting Keller to post an annual profit of 78 million pounds, according to Reuters Estimates.

Keller shares hit a two-week high at 979 pence before easing back to be 3.4 percent higher at 949.5 pence by 0815, to value the business at 629 million pounds.

Keller prepares the ground for major construction projects, such as building foundations for the Chicago Spire, a 150-storey, 610-metre high residential tower set to be the tallest building in the United States. It made a pretax profit of 40.1 million pounds ($79.3 million) in the six months to end-June on revenue up 3 percent to 465 million pounds

"The momentum of the past two years has continued through this first half, with strong overall trading, further margin enhancement and an impressive contribution from all our recent acquisitions," Atkinson said, adding: "Our U.S. operations as a whole had a very good first half.

Concerns about Keller's U.S. business, which account for half of group revenue, have hit the company's shares since they hit a record at 1,135 pence on July 10.

Atkinson said U.S. commerical and public infrastructure markets, 80 percent of its business there, remained robust although residential, a fifth of its U.S. activity, had seen a further contraction "which still shows no signs of abating".

Revenue from Keller's U.S. operations rose 6 percent in dollar terms in the first half but were down 3 percent in sterling terms.

"Despite the currency impact, operating profit of 29.4 million pounds was up 6 percent, reflecting a further increase in the previously strong margin of the U.S. foundation businesses," the company said.

Keller said it would take a second-half charge of no more than 10 million pounds after disposing of its loss-making Makers building services unit in Britain which will be sold piecemeal.

Altium Securities analyst David Phillips said in a broker note he was set to raise his forecasts, given Keller's had signalled profit growth significantly in excess of last year, a record order book and strong underlying markets.

"We continue to rate the stock as a 'Buy'," he said.