Keller JV wins £167m HS2 contract

Keller said on Thursday that its 50:50 joint venture with VSL International (KVJV) has been awarded a £167m contract to deliver geotechnical work for HS2.

The contract was awarded to the JV by Align, a joint venture of Bouygues, Sir Robert McAlpine and VolkerFitzpatrick.

The C1 section consists of 21.6km of high-speed rail infrastructure, including a 3.4km viaduct and twin-bore 16km tunnels under the Chilterns. The JV’s scope of work is to construct the piled foundations for the viaducts, grouting works, retaining structures for four ventilation shafts, and ground improvement works for the execution of the tunnel cross passages.

Keller said the JV has already completed supplementary site investigations and pile testing. The teams are currently working on advance works for the south portal of the tunnel that will be the entry point for the tunnel boring machines, and the first diaphragm wall for one of the ventilation shafts.

Keller’s Europe president Jim De Waele said: "The KV joint venture is a continuation of our successful partnership on the Melbourne Metro Project in Australia. We're excited to bring our complimentary geotechnical capabilities, experience and capacity on one of the most demanding and exciting transport projects in Europe."

Broker Liberum said Keller’s share of the contract is about £83.5m.

"The margin on the contract is expected to be circa 4-5% and so, assuming the contract is split evenly between FY 21 and FY 22 and taking the mid-point of the margin range of 4.5%, we would expect an EBIT contribution of circa £1.9m per annum.

"This would increase our current FY 21 EBIT estimate of £80.2m by c.2% and our FY 22 EBIT estimate by a similar amount. The contract is much larger than Keller’s average contract size of between £25k and £10m, which puts the size of the contract win in context. We believe Keller is well placed to win further contracts on HS2 and also expect that HS2 will begin to tighten the market as a whole."

Liberum retained its ‘buy’ recommendation and 900p price target on Keller.