- Costain Group Considers Dividend Resumption
- Solid First-Half Performance and Financial Position
- Diverse Project Portfolio and Future Revenue Outlook
After reporting a solid first-half performance and a strengthened financial position, Costain Group is contemplating resuming dividend payments.
The civil engineering firm, which contributed to the construction of the Channel Tunnel Rail Link and the Thames Barrier in London, had a flat six-month revenue of £664.4 million, concluding in June.
Work on upgrading Gatwick Airport Station and constructing the southern section of the HS2 high-speed rail line bolstered the company’s largest division, transport, in terms of revenue.
This was partially offset by declining revenues from road and integrated transport initiatives. As a result of the completion of contracts such as the Edith Rigby Way near Preston, Lancashire.
Comparatively, the natural resources division of Costain experienced a modest increase in sales due primarily to its function as a construction delivery partner on contracts for defense contractor Babcock and the Atomic Weapons Establishment.
This contributed to a 7.1% increase in the group’s adjusted operating profits to £15 million, as did the benefits of its “transformation program.”
In addition to ensuring that pension deficit payments were “substantially reduced,” the Maidenhead-based company also refinanced its banking and bond surety facilities.
As a result, the company is considering resuming dividend payments, including a dividend payment for the most recent half-year period.
Alex Vaughan, the chief executive officer of Costain, stated, “The outlook for our markets remains positive, despite the short-term rephasing of government transportation spending.”
He added, “While we are cognizant of the macroeconomic environment and the timing of customer procurement cycles, the quality of our secured and preferred bidder work provides us with good visibility on future revenue, with more than 90% of revenue secured for the remainder of 2023.
At the end of June, Costain’s order and preferred bidder book totaled £ 4 billion, which included contracts from Magnox to decommission several nuclear sites and to provide consulting services to BP and Yorkshire Water.
Since then, the company has secured additional contracts with the Department of Transport and United Utilities, with the latter providing a two-year contract extension for maintenance work and the delivery of larger capital projects.
Having secured 90% of revenue for the second half of this year, the company’s annual projections for 2023 remain unchanged.
Since the beginning of the year, Costain Group shares have increased by approximately a quarter and were up 3.3% at 49.5p on Wednesday morning.
Richard Costain founded the company in Liverpool in 1865, and it flourished during the UK suburban housing boom of the 1920s before expanding into railway, port, and chemical facility construction.
It built the Cardiff Bay Barrage, restored St. Pancras Station, and built Dubai International Airport and Tsing Ma Bridge in Hong Kong.
