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Keller Group to exit heavy foundations business in Singapore, Malaysia
[BENGALURU] Ground engineering contractor Keller Group Plc said on Thursday it would exit its heavy foundations activities in Singapore and Malaysia and scale back in Brazil and South Africa, leading to 700 job cuts.
Keller Group expects to take an exceptional restructuring charge of about £57 million (S$100.1 million) in its full-year results.
"We are taking tough but necessary actions to reduce our cost base and exposure to unprofitable market segments, and we are also sharpening our control regime," chief executive officer Alain Michaelis said in a statement.
Keller, whose history dates back to 1860, said its heavy foundations activities in Singapore and Malaysia were facing heavy competition and pricing pressure.
Heavy foundation activities involve laying the foundation for structures whenever weak soils have little capacity to resist an existing load or a change in existing load.
Keller, which provides systems and services for monitoring the safety of buildings, ground improvement equipment and cable systems to the construction industry, started a review of its Asia Pacific business in October, citing deteriorating conditions in South-east Asian markets, especially Malaysia.
The company said in July its business had been hit in Malaysia, where the surprise win of Mahathir Mohamad in the elections led to the country putting some major planned infrastructure projects on hold.
Keller also flagged challenging market conditions in Brazil and South Africa, hurt by geo-political tensions, and said it was taking "proactive measures" to scale back its operations in those difficult markets.
"It is encouraging to see management reacting quickly to events in its end markets and we take some comfort from the fact that the net cash costs are minimal," investment bank Liberum said in a note.