Half-year profits climb at Costain

Alex Vaughan, Costain chief executive officer.

Construction and engineering giant Costain has reported a rise in half-year profits.

The company reported pre-tax profits for the six months ending June 30, 2022 of £11.2m, up from £9.1m last time. Adjusted profit before tax was up 41.5% to £13.3m, compared to £9.4m in the same period last year. Group revenue rose 19.5% to £665.2m from £556.8m.

Alex Vaughan, chief executive officer, said the company had delivered a “strong operating performance” reflecting volume increases and inflation recovery mechanisms built into its contracts.

The company said around £560m of contract revenue was secured for the second half of 2022, representing approximately 90% of expected group revenue for the second half, with long-term contracts in place, together with a broadening mix of consultancy-led services.

Looking ahead, Costain said operating profits for the full year 2022 are expected to show good year-on-year growth, with its pipeline of new opportunities “strong”.

Vaughan added: “Our adjusted operating profit increased by 22% year-on-year, and we had a strong adjusted free cash performance, ending the period with £95.9m, with a positive net cash flow expected in the second half.

“Despite material availability and inflation challenges, we have managed the supply chain pressures effectively, while delivering a robust operational performance with new contracts being won on attractive commercial terms with appropriate risk.

“Our four chosen markets of transport, water, energy and defence remain resilient, and the pipeline of potential new business is healthy. We undertook a very high level of bidding activity in the first half, with award decisions expected in H2 22 and in H1 23.”

He added: “While we remain mindful of the macro-economic backdrop, we are pleased with the quality and scale of our order book, including secured multi-year infrastructure programmes, the volume of preferred bidder work and the additional long-term framework contracts which will deliver continued progress in 2023 and beyond.”

A health and safety incident in July saw the group experience a fatality on one of its rail contracts and this incident is currently being investigated.

Vaughan said: “We are shocked and saddened by this tragic incident and we, and our sub-contractor, are working with the authorities and our client in an investigation to fully understand its causes. We are focused on supporting the family and on the wellbeing of our colleagues.”

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