Costain sets sights on No.1 spot

Costain’s new strategy of ‘Being Number One’ will result in a cut-back in the number of sectors the group works in from 15, the current position, to just eight or nine.

Andrew Wyllie, the construction group’s new chief executive, listed the ‘Big Five’ market sectors as water asset management, roads, health/education, rail and retail. He also confirmed that Costain will also be staying in oil/gas. No further details were offered, other than that high-rise residential is one sector Costain plans to withdraw from.

Wyllie was appointed last September. He has been quick to build on the momentum achieved by Stuart Doughty, his predecessor.

“I’m very pleased with what I’ve found in Costain,” said Wyllie. “It is a great brand and everyone is ambitious. My strategy of ‘Being Number One’ means that it’s my job to harness our people’s tremendous spirit and I’m pleased with the progress we have already made in just a few months.”

Costain’s latest financial results (12 months to 31 December 2005) show turnover higher at £770m (£700m). Pre-tax profit strengthened to £25m (£11m).

The introduction of the new IFRS accountancy standard distorted the two figures as it changed the way in which profit are recognised on Alcaidesa, Costain’s Spanish property development joint venture. “The like-for-like improvement in profit was 6%,” said Wyllie.

His new ‘stretch objective’ to all staff at Costain is to grow both turnover and profits concurrently. “That’s a tall order, I know, especially as we’re talking about doing it on a compound basis,” he said.

Charles McCole, finance director, pointed to the prospect of Costain eliminating its negative net worth at long last. “By the end of 2006 we will have eradicated it,” he explained.

He also said: “We have addressed the two issues of paying a dividend and resolving the pension deficit in parallel. We have got the regulator’s approval, subject to our 2006 results, to return a dividend for 2006, paying this in April 2007.” It would be Costain’s first dividend since 1991.

Costain results

12 months to 31 December 2005

Turnover £770m ▲ 10%

Pre-tax profit £25m ▲ 127%