Energy and transport jobs holding up, says chief executive
Costain has said it doesn鈥檛 expect its business to be hit by the impact of the predicted recession after posting improved half year results this morning.
The firm鈥檚 main markets are water, energy and transport, such as road and rail, with business from all three up in the first half.
Chief executive Alex Vaughan said: 鈥淲e have chosen to focus on those markets where strategic investment has to be made and is not discretionary and that gives me confidence [about the future].
鈥淲e are seeing investment continuing to flow and in the amount of work we are bidding. These [jobs] are critical needs for the UK to grow and prosper. I don鈥檛 think there will be a recession in infrastructure but London developers and housebuilders could be affected.鈥�
Vaughan said the firm was helping staff with the cost of living crisis with improved pay, financial management training and staff discount schemes.
He said the firm has inflation recovery mechanisms built into its contracts to make sure it is not hit for the escalating cost of materials. 鈥淭he main ones for us [where we are affected] is concrete and steel.鈥� And he added: 鈥淲e don鈥檛 do any fixed price, lump sum work.鈥�
Costain also carries out nuclear work but Vaughan admitted that despite plans to build more reactors in the UK, shovels in the ground were at least half a decade away.
鈥淣uclear is a market for five years鈥� time. There is planning, development consent orders, public consultations, funding models to sort out. It takes a long time.鈥�
Costain said it spent 拢2.6m on restructuring costs to improve its efficiency in IT and digital in the first half while it also booked a 拢500,000 profit on selling its stake in a hotel chain which came with a legacy PFI investment.
The firm, which drew a line last year under two problem contracts in Wales and Cambridgeshire, said pre-tax profit in the first half was up 23% to 拢11.2m on turnover up 20% to 拢666m.
Operating margins in the first half were 2.1% with Vaughan reiterating the long-term target was a figure of between 5% and 6%.
Analysts are expecting full year turnover to be around 拢1.3bn with pre-tax profit forecast to between 拢31m and 拢33m. Group revenue last year was up 9% to 拢1.1bn with the firm narrowing pre-tax losses to 拢13.3m from 拢96m last time.
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