Keller Group H1 Earnings Call Highlights

Key Points

• Keller delivered record first-half 2026 results, with constant-currency revenue up 11%, underlying operating profit up 17.1% and margins improving to 7.3%. Management remains confident of meeting its upgraded full-year expectations and achieving a fourth consecutive record year.
• North America was the main growth engine, with revenue up 16.7% and operating profit up 17.7%, driven by data-center foundations and major infrastructure projects including the I-40 highway remediation. Data centers rose to 9% of group revenue, while weaker multifamily residential activity remained a headwind.
• Cash generation supported a 57% increase in the interim dividend and ongoing share buybacks, while management expects to end the year with approximately £30 million of net cash. EMEA profit rose despite lower revenue, whereas APAC revenue grew strongly but profit was broadly flat due to pricing and weather pressures.

Keller Group LON: KLR reported record first-half results for 2026, with revenue and underlying operating profit rising as strong demand for data centers and infrastructure work in North America offset weaker conditions in some residential and European markets.

Chief Executive James Wroath said the company was on course for its fourth consecutive record year. Revenue increased 11% on a constant-currency basis during the first half, while underlying operating profit rose 17.1% and the underlying operating margin improved to 7.3%.

Wroath said the performance demonstrated the benefits of Keller’s geographic diversification and ability to shift resources toward higher-demand subsectors. He also paid tribute to former Chief Executive Michael Speakman, who died at Easter, saying changes made over the prior five to six years had been fundamental to the company’s performance.

North America drives growth

North America was the principal contributor to the group’s first-half growth. Revenue in the region rose 16.7% on a constant-currency basis to £984.4 million, while underlying operating profit increased 17.7% to £93.8 million. The division maintained a 9.5% margin.

Growth was supported by foundations work for data centers and major infrastructure projects, including the I-40 highway remediation and expansion project, the Hudson River Tunnels and the Second Avenue subway extension.

Data centers became Keller’s largest group subsector, representing 9% of group revenue, compared with 3% in 2025. Wroath said Keller completed more data-center projects in the first half of 2026 than it did during all of 2025. Excluding Suncoast, data centers accounted for more than 15% of U.S. revenue year to date.

“Data centers are pretty much all over the U.S.,” Wroath said during the question-and-answer session, adding that Keller particularly values projects involving difficult geological conditions. He said the company viewed the market as being relatively early in its development cycle and cited projections of $650 billion in data-center spending.

The company’s North American order book rose to £1.37 billion, including just over £100 million of data-center work in hand. Keller separately highlighted the I-40 contract because of its scale and multi-year duration. The project, which concerns reconstruction of a highway between the Tennessee state line and North Carolina after damage caused by Hurricane Helene in 2024, is the largest in Keller’s history.

Chief Financial Officer David Burke said the I-40 contract would contribute to revenue in 2026, 2027 and 2028. Apart from that project, he said the order book retained its usual short-cycle profile, with the company typically completing around two-thirds of its opening order book within six months.

Residential construction remained a weak point in North America. Keller said major multifamily residential developments in Miami had been delayed, contributing to an approximate one-third decline in revenue from that subsector. Moretrench also experienced softer trading as a major client limited investment amid the effects of the Iran war on input costs, though RECON performed strongly on a Gulf Coast liquefied natural gas project.

EMEA profit rises despite lower revenue

Revenue in Europe, the Middle East and Africa declined 5.2% on a constant-currency basis to £396.1 million. Keller attributed the decline to first-quarter weather disruption, fewer major projects and lower revenue from the Trigena project.

However, underlying operating profit in EMEA rose 28% to £19.2 million and margin improved to 4.8% from 3.6%. Burke said the improvement reflected stronger volumes and margins in the United Arab Emirates, solid execution in Europe and the absence of a low-margin NEOM contract that affected 2025 comparisons.

The Middle East delivered improved trading despite disruption from the Iran war, although Keller said it had prioritized staff safety and experienced a brief productivity decline in March. Western Europe remained subdued, while the U.K. market faced high competition, limited opportunities and pricing pressure.

EMEA’s order book increased 16.5% to £396.7 million. Wroath said Keller expected improved second-half trading, supported by stronger expected third-quarter volumes and a healthy tender pipeline.

APAC revenue advances as Austral wins new work

Asia-Pacific revenue rose 22.8% to £227.5 million on a constant-currency basis, driven by Austral and record volumes at Keller Australia. Underlying operating profit was broadly unchanged at £13.8 million, as pricing pressure and severe weather in Queensland weighed on the Australian foundations business.

Austral continued to grow revenue and profit, supported by mining-related civil works. Keller said Austral had won a Parker Point project worth about A$90 million, which will enter its order book at the full-year results.

Keller Australia benefited from public spending on hospitals and data centers, but profitability was affected by price pressure, weather disruption and the non-recurrence of project-closure settlements recorded in 2025. Keller Asia’s revenue and profit were broadly flat, with India expected to grow in the second half after a slow start and Singapore benefiting from construction demand including work associated with Changi Airport’s Terminal 5.

The APAC order book declined 18.9% to £174.6 million, largely because the prior-year comparison included several major marine contracts won by Austral. Management said it expected the order book to improve in the second half.

Cash, dividends and outlook

Underlying earnings per share increased 22%, supported by higher profitability and share buybacks. The board declared an interim dividend of £0.287 per share, up 57%, reflecting the dividend policy introduced in March and an assumed full-year dividend cover of three times.

Free cash flow increased modestly, though conversion declined as growth drove higher working-capital requirements and capital expenditure. Keller had completed £32.4 million of its £100 million share-buyback program by the half-year point. It reported £15.9 million of net debt on an IAS 17 covenant basis and said it had approximately £655 million of funding headroom.

Burke said Keller expected to reach roughly £30 million of net cash by year-end after the impact of buybacks. He added that the company remained confident in maintaining operating margins above 7%, citing portfolio resilience and continued discipline in bidding and project execution.

Management said it remained confident of meeting recently upgraded full-year 2026 market expectations. Keller plans to provide further detail on its strategy and growth ambitions at its Capital Markets Day on Oct. 14.

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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