{"id":527309,"date":"2025-08-20T11:49:05","date_gmt":"2025-08-20T10:49:05","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=527309"},"modified":"2025-08-20T12:54:39","modified_gmt":"2025-08-20T11:54:39","slug":"costain-lifts-margin-despite-revenue-drop","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/financial\/costain-lifts-margin-despite-revenue-drop-20-08-2025\/","title":{"rendered":"Costain lifts margin despite revenue drop"},"content":{"rendered":"

Costain has broadened its profit margin despite lower revenue from road and rail projects, interim results show.<\/p>\n

In the six months to 30 June, revenue fell 18 per cent to \u00a3525.4m, from \u00a3639.3m a year earlier.<\/p>\n

But the tier one contractor\u2019s<\/a> statutory pre-tax profit rose 7 per cent to \u00a318.2m, lifting margin from 2.7 per cent to 3.5 per cent.<\/p>\n

The higher margin \u201creflects the improving quality of our contract portfolio\u201d, chief executive Alex Vaughan said.<\/p>\n

\u201cWe’ve successfully demonstrated that we can deliver growth in profit and margin, as well as further strengthening the balance sheet,\u201d he told Construction News<\/em>.<\/p>\n

Costain was ranked 16th<\/sup> in the CN100 table of top contractors<\/a>. Last year, it turned over \u00a31.25bn and posted a pre-tax profit of \u00a336.5m.<\/p>\n

This morning\u2019s London Stock Exchange announcement (20 August) cited wins including Sizewell C\u2019s 10-year framework, extra work for Anglian Water, and expansion of its Heathrow contract.<\/p>\n

But revenue from road and rail jobs decreased by 53 and 23 per cent respectively. Vaughan attributed this to the scheduled completion of some projects and a rephasing of its three HS2 contracts.<\/p>\n

The road and rail slowdown was an \u201cebb and flow\u201d issue, Vaughan said, noting that Costain expected to start construction of the M60 Simister Island scheme and had been awarded three road jobs for Transport for London.<\/p>\n

Energy revenue rose 36 per cent, driven by BP\u2019s Teesside carbon capture project and Storengy FEED contracts<\/a>, while defence and nuclear revenue rose 14 per cent.<\/p>\n

Consultancy services accounted for 16.5 per cent of group revenue in H1, and Vaughan told CN <\/em>that he expected this part of the business to grow in the short-to-medium term.<\/p>\n

In the six months to 30 June, Costain\u2019s net cash balance eroded from \u00a3166m to \u00a3144.9m, and it paid 97 per cent of its invoices within 60 days, maintaining its payment performance from H1 2024.<\/p>\n

Its order book almost doubled year on year, rising from \u00a31.8bn in H1 2024 to \u00a33.4bn.<\/p>\n

This figure was almost three times larger than Costain\u2019s 2024 revenue, and the firm said \u201cbidding activity levels remain high\u201d.<\/p>\n

Costain is free of bank loan debt or overdrafts, although it refinanced its banking and bonding arrangements in May with a \u00a3100m revolving credit facility, plus \u00a3295m in surety and bonds.<\/p>\n

The firm also launched a \u00a310m share buyback in June<\/a>.<\/p>\n

\u201cAnother set of strong results reflects improved earnings quality and a strong balance sheet,\u201d Investec said in an analysts\u2019 note.<\/p>\n

\u201cThe group is well positioned in attractive markets with good momentum in recent contract wins supporting good visibility.\u201d<\/p>\n

Vaughan said that Costain had already secured 90 per cent of its forecast revenue for 2025, and said he was \u201cconfident\u201d of delivering an operating profit margin of 4.5 per cent.<\/p>\n

\u201cImproved quality of earnings, business resilience and market momentum drive confidence in delivery of FY25 and medium-term expectations,\u201d Costain said in its Stock Exchange announcement.<\/p>\n

It added that \u201cstrong growth opportunities\u201d were expected in energy connectivity via the \u00a380bn RIIO-3 investment programme from 2026 to 2031.<\/p>\n

Vaughan said the government\u2019s new infrastructure strategy and pipeline had provided \u201cclarity and confidence\u201d, describing a \u201cvery positive\u201d market outlook.<\/p>\n

While macroeconomic and global geopolitical conditions may change, he said Costain\u2019s \u201cpositioning and resilience underpin our confidence in delivering on our expectations for further progress\u2026 with a step change in performance expected in FY27 and beyond\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"

Costain has broadened its profit margin despite lower revenue from road and rail projects, interim results show. In the six months to 30 June, revenue fell 18 per cent to \u00a3525.4m, from \u00a3639.3m a year earlier. But the tier one contractor\u2019s statutory pre-tax profit rose 7 per cent to \u00a318.2m, lifting margin from 2.7 per …<\/p>\n","protected":false},"author":135716,"featured_media":484696,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[532,552],"tags":[],"class_list":["post-527309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-costain","category-financial"],"yoast_head":"\nCostain lifts margin despite revenue drop | Construction News<\/title>\n<meta name=\"description\" content=\"Costain has broadened its profit margin despite lower revenue from road and rail projects, interim results show. 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