Underlying profit rises to £10.1m but Costain is hit by construction write downs and a poor performance in oil and gas division
Write-downs and poor performance in its oil and gas division resulted in a £20.7m pre tax loss at contractor and engineering group Costain.
The company blamed the loss on contract claims write-downs in its building and international divisions. The company has taken a £11.9m hit for contracts in its building division which is does not expect to recover. In its June interim statement, the company said it expected expected the write down to be between £12m and £14m.
Lacklustre performance at COGAP, its coal, oil gas and process arm also impacted on the figures.
When the write downs are excluded Costain made an underlying profit of £10.1m, up from £7.7m last year. Revenues grew 26% to £436.2m up from £345.4m.
The results are a blow for Costain’s new management team. Andrew Wyllie, formerly of Taylor Woodrow, was appointed chief executive in September 2005. He undertook a strategic review of the business, releasing the ideas to staff in a document called Being Number One. It included cutting from 15 to 10 the sectors under which it operates.
Six months later Tony Bickerstaff also made the journey from Taylor Woodrow to Costain to become the contractor news finance director replacing Charles McCole.
David Jefferies, chairman said: “The new management team, under the leadership of Andrew Wyllie, has taken robust action to deal with those activities within the group which are underperforming and to ensure the successful operating approach, already in place within the majority of our sectors, is adopted across the whole business."
"The implementation of our strategy - 'Being Number One' - is producing a much sharper focus on performance and delivery.”
Costain’s shares fell 3.96% to 48.50p on the news.