Costain backs FY guidance as H1 revenues surpass expectations

In an update for the six months to 30 June, the construction and engineering group said the stronger revenue reflects the inflation recovery mechanisms built into contracts as it passed through increased costs with higher prices. In addition, increased volumes delivered revenue growth in Transportation and Natural Resources.

The group now expects revenue for the full year to be ahead of market expectations.

Adjusted operating profit for the first half is in line with management's expectations, with absolute profitability increasing year-on-year. Costain said it expects the H1 adjusted operating margin to be flat year-on-year, reflecting the continuing progress in the business offsetting inflation impacts.

"Supply chain pressures have been well managed ensuring a strong and robust operational performance across our contracts," it said. "Our expectations for full year 2022 reported and adjusted operating profit are unchanged and we continue to expect good growth year-on-year."

Costain said its H1 cash performance has been strong, driven by efficient working capital management and operating performance. Net cash at 30 June was around £95m, ahead of market expectations.

Chief executive officer Alex Vaughan said: "I am pleased with our performance in the first half of the year as we continue to generate strong free cash flow, deliver against our strategy and meet our customers' needs across our four markets.

"Our continued progress, supported by a strong order book and pipeline, gives us confidence for the remainder of the year and beyond."