Contractor Costain hints at first dividend payment in four years

Costain is a construction and consulting business (costain)
Costain is a construction and consulting business (costain)

Contractor Costain has signalled dividend payments could be resumed for the first time since 2019, with the construction and consulting firm’s turnaround plan gaining momentum.

The company, which is working on upgrades to the signalling infrastructure on the Piccadilly line and the HS2 project, said a interim payout for the six months to June 30 is “under consideration” by the board with an “announcement expected to be made shortly”.

In the half year Costain recorded revenues of £664.4 million, down slightly, and pre-tax profits declined to £8.5 million from £11.2 million.

But adjusted operating profit increased 7.1% to £15 million and the order and preferred bidder book stood at a healthy £4 billion, compared with £4.3 billion a year earlier.

A payout would be welcomed by shareholders that have observed Costain endure a number of years in the red due to contract difficulties and disruption from the pandemic.

But it has since 2020 diversified into new sectors it works in and upgraded its risk management programme to help it focus on top contracts and high quality customers.

Chief executive Alex Vaughan told the Standard: “The business is in the best shape it has been for four years. That is due to a strong underlying operating performance and a diverse customer base.”

In a company statement he said: “While we are mindful of the macro-economic backdrop, recognising the timing of customer procurement cycles, the quality of our secured and preferred bidder work gives us good visibility on future revenue, with more than 90% of revenue secured for the remainder of 2023.”