Keller Group Targets £800M Free Cash Flow as Growth Strategy Takes Shape

Key Points

• Keller Group set medium-term targets of 5%–7% annual organic revenue growth, a sustainable operating margin of about 7%, approximately 30% return on capital employed, and roughly £800 million in cumulative free cash flow from 2026 through 2030.
• Management said recent margin gains are structural, driven by portfolio optimization, tighter pricing and bid reviews, improved project execution, and the exit from lower-return markets. The company’s order book stood at about £2.4 billion, with demand supported by infrastructure, energy, utilities, industrial projects, and data centers.
• Keller plans to allocate around 40% of free cash flow to ordinary dividends, while using the remainder for bolt-on acquisitions and additional shareholder returns. The group ended 2025 with net cash, a fully undrawn £400 million credit facility, and a target leverage range of 0.5–1.5 times.

Keller Group LON: KLR used its 2026 Capital Markets Day to outline medium-term targets calling for 5% to 7% annual organic revenue growth, a sustainable group operating margin of about 7%, return on capital employed of approximately 30%, and roughly £800 million of cumulative free cash flow between 2026 and 2030.

Chief Executive Officer James Wroath said the specialist geotechnical contractor aims to grow from a stronger profitability base rather than rely on ongoing margin expansion. Keller designs and builds foundations, improves ground conditions and remediates contaminated sites. The group operates in 35 countries, employs about 10,000 people and completes roughly 5,500 projects annually.

In 2025, Keller generated £3.1 billion in revenue and £218 million in operating profit, according to Wroath. North America represents just under 60% of group revenue, while Europe, the Middle East and Asia-Pacific account for more than 40%.

Margin improvement described as structural

Chief Financial Officer David Burke said underlying operating profit increased from £89 million in 2021 to £218 million in 2025, representing average annual growth of about 25%. Group operating margin improved from around 4% to about 7% over the period.

Burke attributed the improvement to portfolio optimization, more rigorous risk-adjusted pricing, improved project execution and greater integration among businesses. The company exited subscale and lower-return markets, strengthened bid reviews and reduced loss-making contracts, he said.

“We believe around 7% is a sustainable specialist margin and not simply a temporary peak,” Burke said.

Keller generally contracts using remeasurable bill-of-quantities arrangements, Burke said, seeking to take responsibility for risks it can control while protecting itself against risks such as third-party delays, design changes and material scope changes. Approximately 75% of Keller’s work is performed for engineering, procurement and construction contractors or general contractors, with the remainder contracted directly with asset owners.

Growth supported by diversified markets and order book

Wroath said Keller’s sector-agnostic operating model allows its local branches to shift resources among end markets including infrastructure, industrial facilities, commercial projects, energy, transport and data centers. Keller’s work typically represents around 0.5% to 1.5% of an overall construction project’s cost, but it supports the structure and finishes that follow, he said.

The company said construction output in its served markets is forecast to expand by approximately 5% annually through 2030, with energy and utilities expected to grow about 7% and infrastructure about 6%.

Keller reported a group order book of approximately £2.4 billion, including the I-40 project in North America. The company said its underlying North American order book was at record levels even excluding the I-40 contribution. About two-thirds of work in the order book is expected to unwind within six months because Keller is engaged early in the construction process.

The company also said its tender and identified-opportunity pipeline is typically worth two to 2.5 times the order book, while emphasizing that such opportunities are not committed revenue and may be delayed or not proceed.

• Projects worth more than £10 million represented approximately 28% of group revenue.
• Small and medium-sized projects accounted for about 72% of revenue and remain central to local customer relationships, workforce development and equipment utilization.
• Keller said its I-40 work included a $650 million variation secured by its North American business.

Regional businesses highlight opportunities

Scott Nichols, divisional president for North America, said the region has more than 80 branches, about 4,900 employees and approximately 2,500 projects annually. He cited infrastructure, power, industrial activity and data centers as current sources of demand, while saying the company sees further potential in power generation, grid capacity and transmission work.

Peter Wyton, divisional president for Europe and the Middle East, said the division generates about £900 million of revenue and £40 million of operating profit across 28 countries. He said Keller expects to sustain a margin of around 5% in the region through active portfolio management, mobility of staff and equipment, and a focus on markets with stronger opportunities.

Deepak Raj, divisional president for Asia-Pacific, said the division generated approximately £400 million in 2025 revenue and around £30 million in operating profit. Australia accounted for about 72% of the division’s revenue. Raj highlighted recurring work supporting Australian iron ore transport and export infrastructure, as well as opportunities in India’s industrial and semiconductor build-out, data centers, energy transition and defense-related projects.

Capital allocation framework

Burke said Keller generated approximately £176 million of free cash flow in 2025, with operating cash conversion of 108%. The company expects annual free cash flow of roughly £150 million to £160 million to be a reasonable planning base when operating at its targeted level.

Keller ended 2025 in a net cash position and maintains a target leverage range of 0.5 to 1.5 times. Its £400 million revolving credit facility is fully undrawn and runs until June 2031, while approximately £219 million of U.S. private placement debt matures in 2030 and 2033.

The company expects to allocate about 40% of free cash flow from 2026 through 2030 to ordinary dividends, supported by a dividend-cover framework of 2.5 to 3.5 times. The remaining cash would be available for bolt-on acquisitions and additional shareholder returns.

Management said acquisitions would be focused on self-funded businesses generally valued at £100 million or less, with potential targets assessed for geographic expansion, additional techniques or customer and sector access. Burke said Keller would pursue transactions only where the strategic rationale, price, integration case and earnings accretion potential meet its requirements.

About Keller Group (LON:KLR)

Keller Group plc provides specialist geotechnical services in North America, Europe, the Asia-Pacific, the Middle East, and Africa. The company offers ground improvement services, grouting, deep foundations, earth retention, marine, and instrumentation and monitoring services, as well as post-tension systems and industrial services. It also provides solutions, such as bearing capacity improvement, low carbon construction, containment, excavation support, stabilisation, marine structures, seepage control, slope stabilization, and monitoring.

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