Costain curbs losses at natural resources arm

Aaron Morby 7 years ago

Costain reduced losses at its natural resources arm in the first six months of the year helping to deliver a 39% jump in pre-tax profit to £16m.

Costain chief Andrew Wyllie says the group's underlying performance has improved dramatically
Costain chief Andrew Wyllie says the group's underlying performance has improved dramatically

The natural resources division, covering water, power and oil and gas, improved its performance to get losses down to £1.1m compared with an £8.4m loss in the same period last year

Chief executive Andrew Wyllie said the division had significantly improved its performance from growth in water sector activities and no additional impact from its Manchester legacy waste PFI contract.

He said Costain was still in final talks over settling its PFI waste contract and would make an announcement in due course.

But the division was impacted by lower contributions from the oil and gas operations, where Costain had retained skills and capabilities in anticipation of an improvement in market conditions.

A strong performance at the infrastructure division also helped to lift overall group performance with revenue up 11% to £875m in the first six months.

Wyllie said: “We delivered another strong performance in the first half of the year with 34% growth in underlying operating profit and a 10% interim dividend increase.

“We are transforming rapidly to differentiate Costain as the UK’s leading smart infrastructure solutions company.

“We are delivering technology-based solutions demanded by our clients who are spending billions of pounds, underpinned by legislation and regulation, to meet ever more complex challenges to enhance the nation’s infrastructure.”

Infrastructure division profits slipped 11% to £24m, due in part to higher bid costs, from revenue up 13% to £694m.

The group’s order book at the end of the first half stood at £3.7bn (2016: £3.9bn), continuing to provide good visibility for future performance.

This figure does not include two southern section HS2 worth £600m to Costain, awarded just after the half-year close.

Wyllie said that Costain had withdrawn from its Hinkley Point marine and tunnelling package worth £350m after failing to agree final terms with client EDF.

Costain will continue to work at the site until the end of this year to complete £20m of existing obligations. Balfour Beatty will then take over to complete the major tunnelling project at the site.


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