Half year profit will be 'substantially higher' than last year due to strong sales and higher margins.

Keller Group is predicting a substantial increase in half year profit after an ‘exceptionally good start' to 2006.

The international engineering specialist said it was buoyed by an outstanding performance in the US and improving conditions in Europe.

The group said that profits and margins were ahead of the same period last year and that profit for the six months ending 30 June 2006 would be substantially higher than 2005's figure of £15.6m.

Keller said that the strong orders and a record order book would push sales in excess of £800m for 2006.

The City reacted very positively to the news this morning as shares increased by over 5% to 526p.

Chief Executive Justin Atkinson said: "An excellent start to the current financial year means that we now expect to beat last year's record results."

"This gives us a strong platform from which to continue our strategy of further consolidating our global leadership in specialist ground engineering services."

Earlier this month Keller Group acquired specialist groundworks contractor Phi Group for £5m.

A further update on trading will be provided at the time of the Group's AGM, to be held on 22 June 2006.