Keller Group (KLR) H1 2024 earnings summary

Executive summary

• Achieved record H1 2024 performance with revenue of £1,489.8m, up 5% year-over-year, and underlying operating profit up 76% to £113.2m, driven by North America and operational improvements.

• Underlying operating margin rose to 7.6% (H1 2023: 4.6%), the highest in 15 years; underlying diluted EPS up 85% to 103.3p.

• Net debt reduced to £100.7m, leverage at 0.3x; record order book of £1.6bn underpins H2 and upgraded FY24 guidance.

• Interim dividend rebased to 16.6p, up 19% year-over-year, with a 5% full-year dividend increase anticipated.

• Free cash flow and EPS both saw significant year-over-year increases, matching or exceeding prior full-year results in just six months.

Financial highlights

• Revenue: £1,489.8m (+5% year-over-year); underlying operating profit: £113.2m (+76%); statutory operating profit: £105.9m (+87%).

• Underlying diluted EPS: 103.3p (+85%); underlying ROCE: 28.4% (H1 2023: 16.6%).

• Free cash flow: £88.6m; net debt down 59% to £100.7m (H1 2023: £244.6m); leverage ratio: 0.3x.

• Interim dividend: 16.6p (+19%); earnings cover for interim dividend: 6.2x.

• Undrawn borrowing facilities of £449.2m; headroom of £650m with revolving credit facility.

Outlook and guidance

• Full-year 2024 expectations materially increased, supported by strong H1 momentum and a record order book of £1.6bn.

• Performance expected to be modestly weighted to H1; North America margins to normalize in H2 as market buoyancy tapers.

• Europe to remain challenging in H2; Austral expected to deliver full-year profits.

• Analyst consensus for FY 2024 underlying operating profit: £178m (range: £176m–£179m).

• Net debt expected to gravitate towards zero by year-end or Q1 next year, with capital allocation options under review.