Trading Statement

RNS Number:8508M
Keller Group PLC
27 June 2003



Friday, 27 June 2003


                                Keller Group plc

                               Trading Statement

Introduction

Keller Group plc ("Keller" or "the Group"), the global construction services
group, is today announcing a trading update for the six months ending 30 June
2003, in advance of its interim results announcement, to be released on Friday,
22 August 2003.

The Board expects that the interim results for the six months ending 30 June
2003 will be broadly in line with its expectations, following the slow start to
the year referred to in both its recent preliminary results and AGM statements.

Whilst orders in the second quarter have remained good in most parts of the
business, it now appears that the anticipated spill-over into the second half of
the year of jobs delayed in the first few months is unlikely to be fully
realised. This, coupled with disappointing trading in the UK and the impact of
the translation effect of a weaker dollar, leads the Board to expect that the
profit before tax for the full year, before goodwill and exceptional items, will
not meet the 20% year-on-year growth target previously anticipated.

Operational review

In the UK, the foundation business has suffered from weak margins from piling,
whilst volumes and margin in the geotechnical and ground improvement businesses
have remained solid. Makers' first half has been impacted by poor productivity
in the highways division of its infrastructure business; the cancellation of a
new-build car park contract; and disappointing spend under its partnering
agreements for social housing refurbishment.

We are tackling the poor performance in the UK in two ways. A corporate review
of the UK foundation business has just been completed and the resulting actions
will be implemented shortly, with margin improvement likely to be evident in the
second half. In Makers, a restructuring programme is underway which will
concentrate the business on its main markets - social housing and
infrastructure, particularly rail and water - and will involve the divestment
of, or withdrawal from, some of the peripheral activities of the business.

Whilst these actions will result in some exceptional costs being incurred, we
are confident that they will restore margins in our UK businesses.

Despite a particularly wet winter and spring, the US foundation businesses,
including McKinney, which was acquired in December last year, have delivered a
creditable performance. With some signs of improvement in the US economy, we
anticipate that the US foundation businesses should produce a full year result
close to expectations in dollar terms. The adverse weather also affected
Suncoast, but it has now seen recovery in its high-rise volumes and with the
housing market continuing to show strength, Suncoast should produce a full year
result ahead of last year.

A good first half performance in Continental Europe & Overseas included an
encouraging start from Keller-Terra, the 51%-owned Spanish venture, also
acquired in December last year. The Continental European business is expected to
face a challenging second half, as Germany shows no signs of recovery and some
softening is becoming apparent in France, but with the Far East returning to
normal trading, the overall performance of this business should be in line with
expectations.

Tom Dobson, chief executive of Keller, commenting on the trading update said:

"We are at a relatively early stage in the year and there are still many
variables at play. Although we may now fall short of our ambitious initial
targets for 2003, the business fundamentals remain strong and we remain
confident of reporting growth in trading profits this year."


Enquiries:
Keller Group plc                                              www.keller.co.uk
Tom Dobson, Chief Executive                                      020 8341 6424
Justin Atkinson, Chief Operating Officer & Finance Director

Weber Shandwick Square Mile                                      020 7067 0700
Reg Hoare/ Josh Royston

A conference call for analysts and investors to discuss today's announcement
with Tom Dobson and Justin Atkinson, will be held today at 09.30am (GMT).
Participants should dial 0845 245 3471 from the UK and [phone] from
abroad. A replay will be available for 7 days. To access this please dial 0845
245 5205 from the UK and [phone] for international callers. The
pincode to access the replay is 274389#.







                      This information is provided by RNS
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