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Costain Group PLC on Wednesday said it is considering a resumption of dividend payments and will make an announcement about a possible interim payout ‘shortly’.
The comment came as the Maidenhead, Berkshire-based construction and engineering firm reported a 24% decline in pretax profit for the six months that ended June 30 from to £8.5 million from £11.2 million a year before.
Revenue was flat at £664.4 million from £665.2 million, and cost of sales were trimmed by 1.5% to £618.0 million from £627.4 million, leaving gross profit up 23% to £46.4 million from £37.8 million.
However, Costain said profit was reduced by the costs of its ’transformation’ programme and of ’repositioning’ its digital services for growth. Administrative expenses increased by 50% to £38.8 million from £25.9 million, sending operating profit down 36% to £7.6 million from £11.9 million. Net finance income pulled back some of that decline at the pretax level.
On an adjusted basis, operating profit edged up to £15.0 million from £14.0 million. Costain credited this to growth in its Natural Resources segment and resilience in Transportation.
Costain hasn’t paid a dividend since a 3.8 pence per share interim payment in 2019, skipping a final payout for 2019 amid the outbreak of Covid-19 in early 2020. On Wednesday, it said an interim dividend is under consideration by the board, with an announcement promised ‘shortly’. Costain said this follows improvement in operating performance, the positive outcome of a pension review, and refinancing of debt.
Net cash was £132.1 million on June 30, up from £95.9 million a year ago.
Looking ahead, Costain said its expectations for all of 2023 are unchanged, with 90% of second-half revenue secured already. The order book stands at £2.5 billion, down from £2.7 billion a year before, while the preferred bidder book is worth £1.5 billion, down from £1.6 billion.
‘There remains a positive outlook across our markets, while recognising the short-term re-phasing of the government’s transport spending,’ Chief Executive Officer Alex Vaughan said. ‘We expect that the sectoral growth we have seen in Natural Resources, together with the re-phasing and re-scoping of some infrastructure projects in Rail and Road to continue for the remainder of the year and into 2024.’
Costain shares were up 3.0% to 49.34 pence on Wednesday morning in London.
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