Keller benefitting from recovery in US construction

Keller, the world's largest independent ground engineering specialist, sparked a share-price surge on Wednesday morning after saying that results so far this year have beaten its expectations despite mixed conditions worldwide.

The company said that while economic conditions across global construction markets continue to be "varied", both revenue and profit in the first four months of 2013 was better than it expected at the time of announcing its full-year results in March.

The stock was up 9.52% at 949.5p by 08:30 on Wednesday.

One of the main reasons for the optimism has been the "progressive strengthening" of construction markets in North America, where Keller's foundation contracting companies have performed ahead of budget.

Over in Europe, economic uncertainty still persists though the group did say that it has not seen any further deterioration in market conditions.

The performance of the wider Europe, Middle East & Africa (EMEA) division has improved this year and large infrastructure projects - Crossrail and Victoria station upgrades in the UK and the Gdansk road tunnel project in Poland - are said to be progressing well. Meanwhile, the firm secured its largest contract to date in Russia for work on a new residential complex.

"Elsewhere, the two-speed construction market in Australia continues, whilst in Asia we continue to see good opportunities," the company said.

Following the statement, analysts at Jefferies raised their target price for the stock from 820p to 1,050p and reiterated a 'buy' rating, saying that Keller remains an "attractive way to play [the] recovery" in the North American residential markets.

"In our view we are at the early stages of a recovery cycle in global construction markets, the recovery is not uniform by any means and many of Keller's markets remain fragile, representing risk, but in general, the light at the end of the tunnel is starting to burn a little brighter," said analyst Anthony Codling.

Including Wednesday's surge, the stock has now jumped around 123% over the past 12 months, recovering to levels not seen since late 2007.