Restructuring costs brought profit down in first half, firm says
Pre-tax profit was down at Costain in the first half as revenue at the engineering firm remained flat.
Interim results published this morning showed income of £644m in the six months to 30 June – just 0.1% down on the same period the previous year – as strong performance in its natural resources business balanced out a contraction in transportation work.
Profit before tax was £8.5m, a 24% drop from £11.2m in the first half of last year.
The group reported that after adjustments – which included £2.1m in restructuring costs associated with its transformation programme and a £5.3m loss on the impairment of an intangible asset – its profit before tax stood at £15.9m, 19.5% up from the adjusted figure for HY22.
Chief executive Alex Vaughan, who was named CEO of the year at the 2022 Building Awards, said the firm’s transformation programme to create efficiencies within the group would deliver benefits in the second half of the year and into 2024.
“There remains a positive outlook across our markets, while recognising the short-term rephasing of the government’s transport spending,” he said.
“We 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”.
Transportation remained Costain’s largest function, though revenue was down 1.5% to £487m as rephasing and rescoping on major roads schemes dragged income down.
“We remain mindful of the macro-economic and geopolitical backdrop, recognising the challenges it has created for inflation and energy costs, and its impact on the rephasing and rescoping of some major contracts, in particular in Transportation,” the report said.
Withing the transport business, rail revenue increased 18.3% because of the volume of work delivered by the Skanska Costain Strabag joint venture to construct the southern section of the route.
The group reported it had 90% of revenue secured for the second half of the year with an order book worth £2.5bn, and said it was trading in line with expectations for the full year.