20th Aug 2025 09:30
(Alliance News) - Costain Group PLC on Wednesday said it remained confident on its long-term prospects despite HS2 delays denting sales in the first half of 2025.
In response, shares in the Maidenhead, England-based construction and engineering company slumped 16% to 137.25 pence each in London on Wednesday.
Pretax profit rose 7.1% to GBP18.2 million in the six months to June 30 from GBP17.0 million a year prior. Adjusted operating profit grew 3.0% to GBP16.8 million from GBP16.3 million with an operating profit margin of 3.2% compared to 2.5% a year ago.
"Growth in adjusted operating profit and margin reflects the improving quality of our contract portfolio," commented Chief Executive Alex Vaughan.
Costain said it remains confident in delivering an adjusted operating margin run-rate target of 4.5% during financial 2025.
Profit growth came despite revenue falling 18% to GBP525.4 million from GBP639.3 million.
Growth in Natural Resources was offset by a reduction in Transportation from expected road project completions and a new schedule from HS2, which is rephasing elements of contracted activities in the short term into future years.
HS2, or High Speed Two, is a high-speed railway project in the UK designed to connect London and Birmingham, with further connections to the north of England and Scotland. But it has been dogged by delays and cost overruns.
In June, the government said the opening of HS2 will be delayed beyond the target date of 2033 but did not give a specific date. The project was given the green light in 2012, and was expected to be open by 2026.
Costain said earnings per share increased 8.0% to 5.4 pence from 5.0p, but fell 1.7% to 5.5p from 5.6p on an adjusted basis.
The interim dividend was more than doubled to 1.0p per share from 0.4p.
CEO Vaughan said Costain continues to win new work and add new customers in growth markets that provide essential infrastructure, expanding its forward work position to GBP5.6 billion, more than four times 2024 revenue.
"We have already secured 90% of our forecast revenue for the year and our bidding activity levels remain high," Vaughan added.
Vaughan said "there is real momentum in our chosen markets of transport, water, energy, and defence and nuclear energy", following the government's recent 10-year Infrastructure Strategy and Infrastructure Pipeline, together with the significant increase in committed regulatory investment in water, energy and aviation.
"Whilst we remain mindful of the near term macro-economic and geopolitical environment and the potential consequences of government spend phasing decisions, the improvements in market outlook and the group's positioning and resilience underpin our confidence in delivering on our expectations for further progress in FY25 and FY26, with a step change in performance expected in FY27 and beyond," Vaughan added.
By Jeremy Cutler, Alliance News reporter
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