Costain revenue ‘beating market expectations’

Costain’s revenue in the first half of the year has surpassed market expectations, the contractor has announced.

In a trading update this morning, the civils firm outlined that it expects its full-year turnover to also beat what analysts expected. In the year ending 31 December 2021, it turned over £1.14bn.

The firm revealed that its net cash as of 30 June stood at £95m, approaching the £119m it reported in its full-year results in 2021. It said this is ahead of market expectations and that it would deliver further positive net cash in the second half of this year.

The contractor credited its performance to its “efficient” working capital management, and said it was a reflection of the inflation recovery mechanisms built into contracts to guard against higher prices, together with increased volumes delivering revenue growth in its Transportation and Natural Resources divisions.

Costain added that supply-chain pressures had been “well managed”.

Adjusted operating profit for the first half of this year is in line with management’s expectations, it added, with its operating margin expected to be flat year-on-year, reflecting what it said was “the continuing progress in the business offsetting inflation impacts”.

Costain chief executive Alex Vaughan added: “I am pleased with our performance in the first half of the year, as we continue to generate strong, free cashflow, deliver against our strategy and meet our customers’ needs across our four markets. Our continued progress, supported by a strong order book and pipeline, gives us confidence for the remainder of the year and beyond.”

In February, the contractor ended a contract dispute with National Grid with a final settlement of £43.4m. This had contributed to a £13.3m loss before tax in its full-year results for 2021.

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