Costain profit up but takes bigger hit on PFI waste job

Costain has posted a solid set of results for 2016, but taken another hit on its £400m Greater Manchester Waste PFI scheme.

The contractor posted a 26% leap in revenue to £1.66bn, up from £1.32bn in 2015, while pre-tax profit increased 19% to £30.9m, up from £26m.

However, losses on its Manchester waste PFI scheme hit £15.1m for the year, up from the £11.4m hit the firm reported in half-year results last August.

Costain said the problem project - first awarded in 2007 - will now complete in 2019, a year later than previously thought. The firm’s finance director Tony Bickerstaff told Building at the time of the firm’s half-year results it had hoped to complete the project in 2018.

Of Costain’s two operating divisions, infrastructure led the way, with revenue up 28% to £1.28bn, up from £996m, while underlying operating profit increased 11% to £56.6m, up from £49.9m.

The division is working on some of the UK’s largest infrastrucutre jobs, including the £400m overhaul of London Bridge station, Crossrail, Hinkley Point C and improvements to the M1.

Natual resources - which includes the PFI waste job - posted an £8.6m underlying operating loss, compared to an £11.1m loss the previous year. Revenue increased 19% to £377.3m, up from £317.6m.

Costain’s order book held firm at £3.9bn. Chairman Paul Golby said the firm’s infrastructure focus was continuing to pay off: “The cross-party political support for investment in infrastructure as a facilitator of sustainable economic growth, coupled with our customers’ committed multi-billion pound investment programmes, creates a positive environment for the Group to continue to grow.

“This is evidenced through recent decisions to progress investment programmes at Hinkley, Heathrow and High Speed 2…

“Costain is well-positioned to take advantage of the opportunities that lie immediately ahead and this, combined with the good visibility we have over the medium-term, reinforces our confidence for the future.”

Chief executive Andrew Wylie said the firm was committed to investing heavily in research and development as part of its ‘Engineering Tomorrow’ strategy.

Investment includes sponsoring 13 PhD students undertaking research at universities including Cambridge and Imperial, while its 300-strong engineering centre in Manchester has partnerships with 15 universities.