Increased work in the water, defence and nuclear sectors compensated for the 鈥渞ephasing and rescoping鈥� of roads contracts, the company reports.
In the six months to 30th June 2023, Costain made a pre-tax profit of 拢8.5m (2022 H1: 拢11.2m) on revenue of 拢664.4m (2022 H1: 拢665.2m).
Costain operates through two divisions 鈥� Natural Resources and Transport. Transport brings in聽 three-quarters of the business and last year made more than six times the profit that Natural Resources made (in the first half of the year). This year, Natural Resources鈥� operating profit of 拢7.5m was bigger than the 拢6.9m made from Transport.
Most of Costain鈥檚 transport work is either on HS2, as part of the Skanska Costain Strabag joint venture, or for National Highways. With cancellation of the smart motorways programme and completion of the Preston Western road, Costain鈥檚 road revenue declined by 16% in the first half of the year. Rail revenue, by contrast, increased by 18% thanks to HS2.
Despite inflation pushing up contract values over the past couple of years, Costain has seen no growth in the past year and little prospect of any ahead. Its order book of 拢2.5bn is 拢200m lighter than a year ago and preferred bidder book of 拢1.5bn is 拢100m down on the year.
Chief executive Alex Vaughan was optimistic, however. 鈥淭here remains a positive outlook across our markets, while recognising the short-term rephasing of the government鈥檚 transport spending,鈥� he said. 鈥淲e expect that the sectoral growth we have seen in Natural Resources, together with the rephasing and rescoping of some infrastructure projects in Rail and Road to continue for the remainder of the year and into 2024.
鈥淲hile we are mindful of the macro-economic backdrop, recognising the timing of customer procurement cycles, the quality of our secured and preferred bidder work gives us good visibility on future revenue, with more than 90% of revenue secured for the remainder of 2023. Our expectations for 2023 remain unchanged and we continue to be confident in the group鈥檚 long-term prospects.鈥�
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