Turnover in line to be 拢1.5bn for 2016

Analysts are expecting Costain to post revenue in excess of 拢1.5bn this year as the firm looks to fill its boots on infrastructure work.

The firm has a stated objective of 鈥渁ccelerating growth鈥� and in its latest interim results, Costain said it has already picked up 拢1.4bn of turnover this year.

A broker鈥檚 note from Liberum said it had updated its full year revenue forecast to 拢1.52bn and Costain finance director Tony Bickerstaff (pictured) said analysts were predicting turnover to be up 25% on last year鈥檚 拢1.3bn.

Work is being driven by rail and water schemes such as Crossrail and the AMP6 water upgrade work as well as acquisitions which saw the firm splash out 拢17m last month for roads technology specialist Simulation Systems.

But the firm鈥檚 拢400m Greater Manchester Waste PFI scheme continues to dog profit with Costain racking up another loss on the scheme it won back in 2007.

The latest hitch saw it take an 拢11.4m hit on the project 鈥� sending its natural resources division to an 拢8.4m loss 鈥� which has involved building 46 facilities across the region.

All are now up and running but Bickerstaff said it was having to send in teams to a number of plants to improve their efficiency. 鈥淲e鈥檙e only allowed in during a shutdown or maintenance period.鈥�

The next level of completion on the scheme for operator Viridor Laing is slated for 2017 but Bickerstaff said more work will still need to be carried out the following year. Costain has previously said it expects to finally draw a line under a scheme that first saw it report problems back in 2014 by 2018 and added: 鈥淭hat plan hasn鈥檛 changed.鈥�

The news was a blot on its results for the six months to June which saw the firm post a 13% increase in pre-tax profits to 拢11.3m while revenue was up 27% to 拢791m.

Bickerstaff joined the ranks of executives who have recently said the UK鈥檚 decision to leave the EU has not affected business. 鈥淭here has been no day-to-day change whatsoever. It feels like no change.鈥�

He said it would give the industry confidence if new prime minister Theresa May gave the green light to schemes like Hinkley but added: 鈥淸While] it鈥檚 good to have those big ticket items you need a mixture of investment in infrastructure.鈥�

But he said the government needed to take a leaf out of Team GB鈥檚 success at the recent Rio Olympics if it wanted to make sure the UK competed on the world stage. 鈥淭he investment in Team GB began eight years ago, before London [2012]. Infrastructure is the same. Invest in infrastructure and we will see the benefits.鈥�

Losses in the firm鈥檚 tourist development at the bottom of Spain, opposite Gibraltar, narrowed to 拢200,000 from 拢500,000 last time. Bickerstaff said the scheme, called Alcaidesa and which features golf courses and a marina, was non-core with Costain looking to sell it at a later stage.

 

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