KLR results 15% below current expectations
Companies: Keller Group
Geotechnical contractor, Keller Group (LSE: KLR) released a profit warning this morning announcing FY 2016 underlying results would be 15% below current market estimates.
Its two largest divisions North America and EMEA, which account for 70% of group revenues, have delivered "steady results", and expectations for the core markets within those divisions are unchanged.
However, Canada and sub-Saharan Africa "remain depressed" leading the Group to undertake "further restructuring". Furthermore the APAC region continues to experience "very difficult market conditions" resulting in the division incurring:
"further operating losses in the third quarter [and is] now expected to record a loss for the second half".
This will clearly impact FY earnings and Keller helpfully quantify this below:
"As a result, the Board now expects the Group's full year 2016 underlying results to be around 15% below current market estimates".
Shares were down 24% in the first few minutes of trading bringing the year to date share price performance down to 23% as investors digest the lowered guidance.
The reduction in guidance to 15% below current expectations would indicate a drop in consensus underlying forecasts from 91p to c.77p. This would put the shares on a 2016 PE ratio of 8.7x.
Looking at the reported EPS figures, the earnings have contained material upwards adjustments over the last two years which muddies the water in terms of getting a useful PE multiple from unadjusted figures.