Costain announces £10m share buyback after increasing profit in half-year results

Costain has announced a £10m on-market share buyback programme after reporting increased pre-tax profit on slightly reduced revenue in the first half of the year.

Alex Vaughan, chief executive of the contractor, said the move was “a result of our confidence in our long-term prospects”.

The buyback will commence immediately and be carried out in two tranches of roughly equal value, with the full process anticipated to end no later than 28 March 2025, subject to market conditions.

It comes as the firm released its results for the six months ended 30 June 2024, which showed profit before tax had increased 100% from  £8.5m to £17m.

Costain also recorded reduced revenue of £639m, compared with £664m in the first half of 2023, which it attributed to a reduction in income from transportation, which follows cuts to HS2.

Vaughan said: “We are performing strongly and are progressing with our strategic priorities in our chosen growth markets, including broadening our customer and service mix. 

“In the first half we have delivered a further significant increase in operating profit together with a sharp growth in earnings per share. 

Costain’s forward work position, a combination of its order book and preferred bidder book, stood at £4.3bn at the end of the period, compared with £4bn at the end of the same period the year prior.

>> Read more: Costain to move to new City home this summer as profit and income slip 

Vaughan said the business had won further significant water contracts after the end of the reported period and expected further contract wins in the second half.

According to the report, Costain “remain[s] on track to deliver an adjusted operating margin run-rate of 3.5% during the course of FY 24 and 4.5% during the course of FY 25, in line with our ambition to deliver margins in excess of 5.0%.”

Commenting on the half year results, Adrian Lunn, director at Eddisons said the firm had “delivered a solid first half performance, despite a complicated backdrop” 

“Despite a dip in revenue, following cuts to projects such as HS2, the company’s recent wins, including the £6.6 million Thames Water contract and the multi-million-pound BP contract in Teesside, signal a positive shift in its outlook,” he said.

“Big infrastructure projects will be popular under our new government. Labour is set on delivering growth levelling up the country and that’s ultimately good news for operators like Costain.”