One Big Job, and Still Legs On It

Interim results for the six months ended 30 June 2026, published 4 August 2026. Keller reports in sterling; earnings per share and share prices are quoted in pence throughout, so no currency conversion has been applied. Valuation dated 18 August 2026 against a share price of 3,108.00p.

Keller is the world’s largest geotechnical specialist contractor, holding around 12% share of its core markets. The global geotechnical contracting market is estimated at £48bn, of which Keller’s addressable core markets represent £25.5bn.

The business is ground engineering: everything that happens between the site being cleared and the structure being built. Keller does not build the building. It makes the ground capable of carrying it.

The product portfolio

How the work flows

The sequence on a typical project runs in one direction, and it is worth understanding because it explains where Keller sits in the value chain and why its order book converts the way it does.

Tender to handover

The divisions are geographic rather than product-based. North America covers Bencor, Case Foundation, Hayward Baker, HJ Foundation, Keller Canada, McKinney Drilling, Suncoast and Moretrench, all rebranded under the Keller name since 2020. Europe and Middle East covers the Central, North-East, North-West and South-East European businesses, Franki, the French-speaking countries, the Middle East and Iberia. Asia Pacific covers Austral, Keller Australia and Keller Asia.

Where the revenue comes from

Revenue cuts

The bulk of the work is small, repeatable and locally won, which is what makes the margin stable; but nearly half the revenue comes from a handful of large projects, which is what makes any single contract like I-40 move the numbers.

Keller have had quite a monumental year thus far. Since January the shares have risen nearly 85%, a huge rise, and they now trade around 3,108p against a 52-week range of 1,238p to 3,468p. The interim results came out on the fourth of August, bringing them up to the 30th of June.

Interim results, six months ended 30 June 2026

Revenue rose 10.3% reported and 11.1% at constant currency to £1.61bn. The underlying operating profit rose even more significantly, by 17.1% to £117.9m, and the underlying margin rose 30 basis points to 7.3%. Very good stuff all round.

Net debt also reduced dramatically, down -74.1% to £15.9m. That is exceptionally good. The yield at current prices is only 2.3%, which is modest considering dividends per share rose from 18.3p last year to 28.7p for this first half.

Operating costs grew 10.1% against revenue growth of 10.3%, which is the whole of the margin story: the company held cost growth just below revenue growth and the operating leverage did the rest.

By division, H1 2026

North America, the growth engine

They saw outstanding performance in North America, with record volume and profit growth underpinned by demand from infrastructure and data centre projects. The division added £14.1m of profit at constant currency, which is essentially the whole of the group increase.

Within it, North America Foundations added £14.2m and Suncoast, the residential post-tension business, added £2.1m despite weak residential markets. Moretrench and RECON together took £2.2m off, with Moretrench Industrial hit by deferred customer spending.

The margin held steady at 9.5%, which is the highest of the three divisions by a wide distance and the reason the group mix is improving.

Europe and Middle East, the margin recovery

Despite the problems in the Middle East they saw improved performance, with margin and profit growth principally in the Middle East but with some in Europe too. Profit rose 28% to £19.2m and the margin expanded 120 basis points to 4.8%, even though revenue fell -5.2% on adverse first-quarter weather and fewer large projects.

Europe delivered strongly in the Nordics, largely offset by a slow first quarter and softness in Western Europe. The United Kingdom continued to face challenging conditions. The Middle East maintained resilient trading and profit growth despite the regional conflict, with brief periods of reduced productivity offset by strength earlier in the year and in the second quarter.

This is still the weakest division on margin at 4.8%, roughly half the North American level, so it remains the obvious place for further improvement.

Asia Pacific, the soft spot

In the Asia Pacific market they saw slightly less upward momentum. Revenue actually grew strongly, up 22.8% to £227.5m, but profit fell -1.4% to £13.8m and the margin compressed -150 basis points to 6.1%.

Austral performed strongly on both revenue and profit. Keller Australia achieved record revenues with good demand from public spending and data centres, but profit was hit by severe weather in Queensland and by margin pressure in the Australian foundations market. Keller Asia was broadly flat, with a slow start in India expected to pick up in the second half.

Margins: what is working and what is not

The group margin has near-doubled since 2019, from 4.5% to 7.3%, and has now been above 7% for four consecutive half-year periods. Management attributes it to improved controls, embedded commercial discipline, product and solution innovation, and ongoing optimisation of processes, and says it is confident of sustaining above 7%.

On the divisional picture: North America at 9.5% is doing well and holding. Europe and Middle East at 4.8% is the weakest but improving fastest, up 120 basis points. Asia Pacific at 6.1% is the one going backwards, down 150 basis points, and is the division to watch.

The big growth areas by sector are data centres, which reached 9% of group revenue, manufacturing, roads and mining. The clear decliner is multi-family residential. Regionally, North America is focused on data centres, roads and manufacturing; Europe and Middle East is seeing growth in multi-family residential and manufacturing; and Asia Pacific is benefiting from mining, data centres, and health and aged care facilities.

Order book by division

The record £1.9bn order book gives significant foresight into 2027 revenue. Two qualifications sit against it.

• The book was significantly elevated by the I-40 contract, and management expects that to unwind over the next two to three years as the project completes.
• The Asia Pacific book is down -19%, which points to the softness in that division continuing into next year.

The I-40 project

This is the largest contract in Keller’s history. It covers reconstruction of Interstate 40 eastbound from the Tennessee state line into North Carolina, following the destruction caused by Hurricane Helene in 2024. A $207m contract variation announced this year took the total work to around $380m, and around $65m of revenue had been recognised year to date.

It is a multi-technique job, drawing teams and equipment from several North American locations, which is why management uses it to demonstrate the division’s ability to mobilise at scale.

The difference between the two is the non-underlying items, disclosed in note 7 of the interim statement. The specific H1 2026 split is not in the sources used here, but the categories and their recent scale are consistent.

Non-underlying items

The scale has come down sharply. Total non-underlying items in operating profit were £27.8m in 2023, £7.5m in 2024, and smaller again in 2025. On that trajectory the gap between underlying and statutory operating profit in 2026 should be of the order of £4m to £6m, which is immaterial against £242m.

Management remains confident of delivering a full-year performance in line with the recently upgraded market expectations. Those expectations, on the company-compiled consensus of seven analysts, are revenue of £3,337m and underlying operating profit of £242m.

Working from consensus to earnings per share

For context, statutory pre-tax profit was £184m in 2024, so around £218m would be a rise of roughly 18%. Earnings per share of 261.5p against 211.3p in 2025 is a rise of 23.8%, a faster rate of increase, and reflects both the profit growth and the shrinking share count.

Two things could move this. Keller’s year is second-half weighted, so the consensus already assumes acceleration; and the buyback reduces the average share count through the second half, which flatters the per-share figure a little more than the profit figure.

Net debt of £15.9m on the lender covenant basis means leverage stands at 0.1x, well below the company’s target range of 0.5x to 1.5x and far below the 3.0x covenant limit. The average month-end position through the half was net cash of £25.5m, against net debt of £39.2m a year earlier, and management expects to end the year with around £30m of net cash after buybacks.

Total headroom is £655.8m, comprising £446.1m of undrawn facilities and £209.7m of cash. The committed funding is a £400m syndicated revolving credit facility running to June 2030 and a $300m private placement repayable in August 2030 and August 2033.

The company has completed around £35m of its £100m share buyback programme, launched on 30 March 2026, which means £65m still to do. On the current market capitalisation that is a further 3.07% of the shares to be bought in, which is quite significant on top of what has already been retired.

Capital was deployed in the half across £42.1m of gross capital expenditure — capex, the money spent on rigs, plant and equipment — £19.6m of dividends and £44.2m of buybacks, which included completing the 2025 tranche. No acquisitions completed, though management describes a healthy pipeline.

The one soft spot in the cash performance is conversion. Free cash flow was £16.4m, up 15%, but that came after an £87.5m working capital outflow driven by higher activity and the ramp-up of I-40. Growth of this kind consumes working capital before it produces cash.

2022 to 2025

Since the 1994 listing, revenue, underlying operating profit, dividend per share and the share price have all compounded at roughly 9% to 10% a year, and the company has maintained or increased its dividend every year for 31 years. Total shareholder return has been top quartile against the FTSE 250 over the last three years.

• Whether I-40 gets replaced. The order book was significantly elevated by it and management expects that to unwind over two to three years. Everything else is secondary to this question.
• North America holding 9.5%. It is the highest margin of the three divisions by a wide distance and the reason the group mix is improving. It added essentially the whole of the group profit increase.
• Europe and Middle East closing the gap. At 4.8% it is roughly half the North American level, so it remains the obvious place for further improvement — and it is improving fastest, up 120 basis points.
• Asia Pacific stabilising. Margin down 150 basis points and order book down -19%. This is the division to watch and the one genuinely going backwards.
• The buyback. £65m still to run, a further 3.07% of the shares, on top of what has already been retired. The share buybacks are really helping to grow the company’s earnings per share.
• Cash conversion. £87.5m of working capital outflow this half. Growth of this kind consumes working capital before it produces cash.

While growth has been very impressive in recent years, a lot of it relates to a single project, namely I-40, which will slowly wind down. It does not appear to be quite there yet, and the company does have a record order book.

All of this growth is coming from the United States market really, both the profit growth and the good buybacks, which have consistently improved their returns.

On this basis I am giving it a growth rate of 25%. That is because they do have this one big project which, when it winds down, may not quite be repeated. But on the other side of things, I suspect something will come up before this work is completed. It is a massive project, but they have a huge backlog of orders within their system, they seem to be getting good contracts in the North American market, and that big project is not about to finish any time soon. So I do think there are still legs on it, and I think something else will come in to replace it.

The share buybacks are really helping to grow the company’s earnings per share as well.

Something worth saying is that if the company achieves the level we project for the full year of 2026, they would be at fair value on an earnings per share growth rate of about 7%. They are quite clearly outperforming that figure at this point in time, and I think they are going to continue to outperform it significantly.

VALUATION SNAPSHOT

This gives a valuation of 6,276.00p against a current share price of 3,108.00p — a value opportunity of +101.9%. The company is seemingly doing great at these values. Very impressive business.

• I-40 unwinding: The order book was significantly elevated by the contract, and management expects that to unwind over the next two to three years as the project completes. A lot of the recent growth relates to that single project and may not quite be repeated.
• Asia Pacific: The one division going backwards — profit down -1.4%, margin down 150 basis points to 6.1%, and an order book down -19% that points to the softness continuing into next year.
• Concentration in North America: All of this growth is coming from the United States market really. The division added essentially the whole of the group increase, so a US infrastructure or data centre slowdown hits the group directly.
• Contract-size concentration: The 1% of contracts above £5m produce 43% of revenue, which is what makes any single contract like I-40 move the numbers — in both directions.
• Cash conversion: Free cash flow of only £16.4m after an £87.5m working capital outflow. Growth of this kind consumes working capital before it produces cash.
• The forecast itself: Keller’s year is second-half weighted, so the consensus already assumes acceleration; and the buyback flatters the per-share figure a little more than the profit figure. The 261.50p override carries both of those assumptions.
• Regional disruption: The Middle East traded resiliently despite the regional conflict, but with brief periods of reduced productivity. Weather also cost Europe a first quarter and Keller Australia a chunk of Queensland profit.

• The order book falling without replacement: If I-40 rolls off and the North American book — up 30% to £1,367.9m — is not backfilled with new work, the case that “something else will come in to replace it” fails, and the 25% growth rate goes with it.
• North America losing 9.5%: The margin held flat this half. If it starts sliding, the group mix stops improving and the whole margin story reverses.
• Asia Pacific deteriorating further: Another leg down in margin from 6.1%, or a second decline in that order book, turns a soft spot into a structural problem.
• Missing the upgraded expectations: Management is confident of a full year in line with £3,337m of revenue and £242m of underlying operating profit. Coming in below that undermines the 261.50p earnings override the valuation rests on.
• The margin dropping below 7%: Management says it is confident of sustaining above 7% and has now done four consecutive half-years. Breaking that run would say the improved controls and commercial discipline were cyclical rather than embedded.
• The buyback stopping: £65m still to do, a further 3.07% of the shares. Halting it would remove a real support under earnings per share growth.