Keller expects record results despite UK weakness

Keller Group expects to deliver record operating volumes and significant revenue and profit growth in 2026, supported by an order book of approximately £2.5 billion, despite continued weakness in its UK construction activities.

The specialist ground engineering contractor confirmed on 12 November that trading remained strong during the period to 31 October. Demand from major infrastructure and commercial projects in North America, mining-related activity in Australasia, the group’s Australian civil engineering business, and construction across the Nordic region has outweighed weaker conditions in several other markets.

Current analyst expectations indicate full-year revenue of approximately £3.37 billion and underlying operating profit of £242 million. These compare with reported 2025 revenue of £3.09 billion and underlying operating profit of £218.2 million, although the 2026 figures remain forecasts rather than final results.

Keller expects the current year to be its fourth consecutive year of record performance. The group reaffirmed its previous outlook following a strong first half and the publication of new medium-term financial targets at its October capital markets event.

The strength of the international portfolio has helped offset continued weakness in the UK business. Keller also identified subdued residential construction in the United States and deferred environmental remediation work at Moretrench among the activities affecting its performance.

The company’s geographical spread means that its group results do not provide a direct measure of British construction demand. Workloads in different markets reflect separate investment programmes, commercial conditions, and construction cycles, with major infrastructure contracts able to support activity even where residential development remains subdued.

Keller specialises in foundations and ground improvement, carrying out engineering work needed to establish suitable ground conditions for buildings and infrastructure. Its activities include techniques for transferring structural loads to competent ground, controlling settlement, supporting excavations, and improving the engineering properties of soils.

The methods selected depend on the conditions encountered at each project. Deep foundations may be required where suitable bearing strata lie below ground level, while ground improvement techniques can be used where the existing material needs additional strength or stiffness before construction proceeds.

Site investigations and geotechnical design establish the characteristics of the ground and the loads it must support. The construction method then needs to account for factors such as groundwater, existing structures, nearby services, and the equipment access available for the works.

These requirements place specialist ground engineering activities early in many construction programmes. Foundation installation or ground treatment must frequently be completed and verified before substantial structural work can proceed, creating a direct relationship between geotechnical performance and the sequencing of subsequent construction packages.

The scale and duration of major infrastructure projects provide a different workload profile from smaller residential developments. Large transport schemes can require specialist operations across multiple structures or work areas, with construction progressing through successive phases over several years.

Keller’s participation in the reconstruction of Interstate 40 in the United States is a significant element of its current order book. The company secured an additional $650 million contract variation in September, bringing its total work associated with the highway project to approximately $1 billion.

At the time of that September award, Keller reported that approximately 10% of its contracted I-40 work had been completed. The remaining programme was expected to extend over three to four years, providing contracted activity across several financial periods.

The September variation increased Keller’s order book to approximately £2.4 billion, with the latest November update reporting a further increase to around £2.5 billion. The additional contracted work provides greater visibility of future activity, although its financial contribution will depend on the timing and execution of individual construction packages.

A large order book does not mean that the equivalent amount of revenue will be recognised during the current financial year. Revenue is recorded as contracted activities are performed, while payments, working capital requirements, and profitability follow the commercial arrangements and progress of the underlying projects.

Multi-year contracts can therefore provide a substantial proportion of anticipated future work without materially changing the result expected for the year in which they are secured. Keller said in September that the I-40 contract variation would not alter its 2026 full-year expectations because of the project’s extended delivery period.

The group continues to anticipate strong free cash flow generation during 2026, reflecting the normal concentration of cash generation towards the second half of its financial year. Its year-end net debt or cash position is expected to be broadly neutral, subject to ordinary working capital movements.

Keller also expects financial leverage to remain well below its target range of 0.5 to 1.5 times net debt to EBITDA. The position provides capacity to consider investment opportunities, although the eventual balance sheet outcome will depend on cash receipts, expenditure, and other movements before the year closes.

Capital allocation has included a £100 million share buyback programme, of which approximately £80 million had been completed by 31 October. The company has also indicated that it continues to assess selective acquisitions alongside investment in its existing operations and its established dividend policy.

At its October capital markets event, Keller set out medium-term ambitions for organic revenue growth averaging 5–7% annually, an operating profit margin of approximately 7%, and return on capital employed above 30%. It also identified an ambition to generate approximately £800 million of cumulative free cash flow between 2026 and 2030.

These objectives are prospective measures rather than confirmed outcomes. Their achievement depends on demand, contract execution, operating margins, and the conversion of the company’s existing and future order book into completed work.

Keller’s latest performance illustrates the different conditions affecting international ground engineering markets. Major infrastructure and commercial projects continue to support its workload, while the company has identified weaker construction demand in Britain and US housing as continuing constraints.

The group plans to publish its preliminary results for 2026 on 18 March 2027. Those results will establish its final revenue, profit, and cash position, together with the progress made in delivering the major projects that underpin its current order book.