Costain鈥檚 strategy of being able to offer more services to large blue chip customers appears to be improving the group鈥檚 profitability. It has reported a 9% rise in pre-tax profits for 2012 on revenue down 5%.
Revenue for the year to 31 December 2012 was 拢934.5m (2011: 拢986.3m). Underlying operating profit was 拢25.1m (2011: 拢24.1m) and profit before tax was 拢26.1m (2011: 拢23.9m).
During the year Costain secured 拢900m of new business. At year-end the order book stood at 拢2.4bn.
As part of a shift in strategy to be able to carry out more elements of large complex contracts, Costain has beefed up its consulting and support services capabilities, both organically and by such acquisitions as Clerk Maxwell and Promanex in 2011.
Chairman David Allvey said: 鈥淥ur progress in recent years, despite challenging economic conditions, is a reflection of the group鈥檚 strategic focus on meeting the complex needs of customers by ensuring that Costain provides integrated consulting, project delivery and operations and maintenance capability.
鈥淒uring 2012, we increased the proportion of revenues from support service related activities to 29%. To meet the demands of major customers for an increasingly integrated service, we must continue to enhance and broaden the range of services we offer. The ongoing drive to develop our services particularly across engineering consultancy, and operations and maintenance will remain a key priority in 2013.鈥�
He added: 鈥淲ith a strong cash position, robust balance sheet and banking and bonding facilities in place, we have the resources to continue to grow the business organically and by acquisition.鈥�
Chief executive Andrew Wyllie added: 鈥淭he Costain Group has been transformed in recent times to meet our customers鈥� evolving requirements. We now deliver engineering services across the full asset life-cycle, from advisory and design to operations and maintenance.鈥� He cited examples in rail, nuclear, waste and highways where Costain鈥檚 position had been strengthened by bolstering its engineering expertise.
Mr Wyllie said: 鈥淥ur customers are increasingly looking to their preferred supply chain partners such as Costain for innovative products and services that will shorten lead times, enhance the quality of project delivery and, above all, provide cost-effective solutions. To remain a preferred Tier One supplier, we need to stay one step ahead of our peer group.
"We have increased our investment in research and development, and have introduced the Costain Start-Up initiative to encourage and support entrepreneurial members of staff to develop their ideas into business opportunities. The 鈥楳ario鈥� asset management tool was one such idea, which is now being sold commercially to rail and highways customers as an addition to Costain鈥檚 range of services.鈥�
He concluded: 鈥淟ooking forward, we expect the rate of change in Costain to accelerate as we take further steps to broaden our services and enhance our product range.鈥�
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