In the first six months of 2024 Costain saw its revenue soften by 4% to £639.3m (2023 H1: £664.4m) but pre-tax profit double to £17m (2023 H1: £8.5m).
Operating profit was £13.9m, up from £7.6m for the first half of 2023.
The board said that the company remains on course to meet its target operating margins of 3.5% for this year and 4.5% for 2025.
Revenue from Costain’s Transportation division was down nearly 9% at £444.3m, reflecting the completion of road and rail contracts.
Its Natural resources division increased revenue by 10% to £195.0m, reflecting growth in water, defence and nuclear energy.
Chief executive Alex Vaughan said: “We are performing strongly and are progressing with our strategic priorities in our chosen growth markets, including broadening our customer and service mix. In the first half we have delivered a further significant increase in operating profit together with a sharp growth in earnings per share. The net cash balance grew to £166m, adjusted operating margin increased as expected, and due to the quality of our earnings, we remain on track to deliver our margin targets during FY24 and FY25.
“As a result of our strong performance and valued long-term relationships with our customers, we have increased our forward work position to a very healthy £4.3bn at the half year, with contract wins across all our sectors. Our focus on industry-leading solutions, predictable performance and long-term established customer relations has seen us win further significant Water contracts post period end and we expect further wins for the group in the second half of the year. The quality and customer balance of our forward work position across our two divisions, together with strong highly visible market investment, gives us good visibility on future revenue and margin. We continue to deliver improvements in the business and remain confident in the group’s prospects.
“As a result of our confidence in our long-term prospects, and our strong cash position, we have today announced a £10m share buyback, which will commence with immediate effect.”
The purpose of the buyback is to reduce the company’s share capital, so any ordinary shares bought by the company will be cancelled. This will return surplus capital to shareholders and increase earnings per share, while maintaining the financial flexibility to invest in the business, the board said.
