Keller Group Reports Record Profits and Strong Cash Generation in 2024 Results
Why we think this is very good
Keller Group has delivered an outstanding set of results for 2024, surpassing expectations across key financial metrics. The company achieved record underlying operating profit of £212.6m, up 18% year-on-year, with a significant improvement in operating margin to 7.1%. Notably, the Group's free cash flow generation increased by 87% to £192.6m, enabling substantial deleveraging with net debt reduced to just £29.5m. This strong financial performance, coupled with a record year-end order book of £1.6bn, positions Keller well for future growth. While acknowledging some macroeconomic uncertainties, the company anticipates further progress in 2025, demonstrating confidence in its strategic direction and market position.
Key Points
- Record underlying operating profit of £212.6m, up 18% year-on-year
- Underlying operating margin increased to 7.1% from 6.1% in 2023
- Free cash flow generation increased by 87% to £192.6m
- Net debt reduced significantly to £29.5m from £146.2m in 2023
- Record year-end order book of £1.6bn
- 10% increase in total dividend to 49.7p per share
- Announcement of multi-year share buyback programme, starting with £25m in Q1 2025
- Anticipates further progress in 2025 despite macroeconomic uncertainties
- Underlying diluted EPS up 30% to 199.9p
- Revenue up 1% to £2,986.7m (4% at constant currency)
Summary
Keller Group plc, the world's largest geotechnical specialist contractor, has reported exceptional results for the year ended 31 December 2024. Key highlights include:
- Revenue up 1% to £2,986.7m (4% at constant currency)
- Record underlying operating profit of £212.6m, up 18% (22% at constant currency)
- Underlying operating margin increased to 7.1% from 6.1% in 2023
- Underlying diluted EPS up 30% to 199.9p
- Free cash flow increased by 87% to £192.6m
- Net debt reduced significantly to £29.5m from £146.2m in 2023
- Record year-end order book of £1.6bn
The company's performance exceeded expectations, with improved results across all key measures. The significant reduction in net debt and strong cash generation have strengthened the balance sheet considerably. Keller's diversified geographical presence and product offerings have contributed to its resilience.
Looking ahead, Keller anticipates further progress in 2025, although it remains mindful of the uncertain geopolitical and macroeconomic environment. The company expects a return to its typical second half weighting in 2025.
Based on these results and the company's future prospects, the Board has recommended a 10% increase in the total dividend for the year to 49.7p per share. Additionally, Keller has announced its intention to launch a multi-year share buyback programme, with an initial tranche of £25m in the first quarter of 2025.
The latest broker target from Berenberg Bank on 06-Aug-24 maintains a 'Buy' recommendation with a price target of 1,750.00p, suggesting potential upside from the current share price of 1,408.00p.