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Costain Group PLC on Wednesday reported interim profit growth, as the infrastructure construction firm grappled with supply chain pressures but said it expects its order book to grow.
Shares were up 5.0% at 41.50 pence each on Wednesday morning in London.
For the six months that ended on June 30, the Maidenhead, England-based company said revenue increased by 20% to £665.2 million from £556.8 million a year earlier, reflecting ‘primarily volume growth and inflation protection mechanisms within contracts’.
Pretax profit increased 23% to £11.2 million from £9.1 million, even as the operating margin slipped to 1.8% from 2.0%.
‘Despite material availability and inflation challenges, we have managed the supply chain pressures effectively, while delivering a robust operational performance with new contracts being won on attractive commercial terms with appropriate risk,’ said Chief Executive Alex Vaughan.
He added that there was a ‘very high level’ of bidding activity in the period, with award decisions expected later this year and into early 2023.
‘While we remain mindful of the macro-economic backdrop, we are pleased with the quality and scale of our order book, including secured multi-year infrastructure programmes, the volume of preferred bidder work and the additional long-term framework contracts which will deliver continued progress in 2023 and beyond,’ said Vaughan.
Order book stood at £2.7 billion as at June 30, down from £4.0 billion on December and £3.4 billion compared to 2021. The company said this reflected ‘the timing of major contract bids’.
Costain said it expects full year order book to strongly increase with upcoming contract award decisions, which are expected in the second half of 2022 and first half of 2023.
Net cash balance amounted to £95.9 million as at June 30, down from £119.4 million on December 31.
Costain declared no interim dividend, unchanged from last year. It said it will return to dividend list ‘at appropriate time’ and that it is currently focussed on investing and increasing its cash balance.
Looking ahead, the company said 2022 adjusted operating profit is expected to show ‘good growth year-on-year and our expectations are unchanged’.
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