Costain targets nuclear and waste as order book climbs 25%

Costain has boosted its order book by 25% to a record £2.5bn, as it exploited growing opportunities in the water, nuclear and waste sectors.

Revenue at the firm has increased substantially to £508.2m (£467.5m), but pre-tax profit fell by a third to £6.9m for the period (£10.1m).

The news came as the contractor published its interim results for the half year to 30 June 2009.

The company blamed the fall in profits on increased pension charges and a sharp drop in interest rates which reduced its income generated from its "strong" cash balance. The firm's net cash positiion stands at £119.2m, down from £133.2m in June 2008.

Costain also signalled a retreat from its building operations in the health, education and retail sectors. It said that its Community division, which operates in those markets would be "scaled down to re-allocate resources to more attractive opportunities".

Those opportunities include the water sector where Ofwat has a projected capital spend of £20bn for 2010-15; waste, where there will be an estimated spend of £30bn to 2030 as the sector strives to meet UK and EU recycling targets; and nuclear where there is an estimated £3bn-a-year decommissioning spend and the prospect of new build projects.

Commenting on the results, chairman David Allvey said: "“As well as in established sectors such as water and highways, our strategy is also providing significant opportunities in new business areas, such as nuclear and waste, where tendering activity is increasing.

“We therefore entered the second half of the year with a record order book, robust finances and a net cash balance in excess of £100m. We look forward to reporting continued progress at the year-end in line with the Board’s expectations.”

Civil Engineering - overall

These operations represent over 85% of Costain’s order book.

Civils – environment

Revenue was up to £223.4m (£175.9m), with an operating profit of £7.8m (£3.7m).

Civils - infrastructure

Revenue climbed to £164m (£106.9m), with an operating profit of £6.8m (£8.1m).

Building - community

Revenue down 47% to £77.7m (£146.9m), with an operating loss of £5.2m. Order book reduced to £0.15bn and now represents just 6% of the group's total.

Engineering and project management

Revenue of £42.5m (£37.2m), with an operating profit of £2.7m (£1.8m).

Land development

Revenue of £0.6m (£0.6m). Post-tax loss of £0.7m (£0.6m).