Costain, which until now has done most of its work with the Swedish contractor in south-east England, is already vying for contracts to redevelop Birmingham Bull Ring and the Birmingham Northern Relief Road project, which has been retendered.
Announcing pre-tax profit up from £500 000 to £2.1m for the year to 31 December 1999, chief executive John Armitt said: “There is now a mutual desire to increase the scale of the business away from the South-east.” Skanska, which has a 7.6% stake in Costain, puts in joint-venture bids with Costain on any job worth more than £20m.
Skanska also has an option to buy up to 40% of Costain at a fixed price. This expires in November but speculation has mounted that Skanska may swoop for Costain before then, after Far Eastern Contractor Intria, which owns a 37.5% stake of Costain, made clear its intention to sell its stake. Intria was partly bought by Malaysian infrastructure giant United Engineers in February. However, Armitt said: “United Engineers is a large organisation and I doubt it is that strapped that it has to do something with a small amount of Costain shares.”
Costain made an operating profit of £100 000 last year. Asset sales amounting to £1.2m and net interest payments of £800 000 helped lift pre-tax profit. Armitt said the group had £4.7m of reorganisation costs, largely from the 200-plus redundancies made last year. He said he did not expect further job losses this year.
