Costain has seen its pre-tax profit soar by a quarter in the first six months of 2011.
The engineering firm said profit before tax is at £10.1 million in the six months to 30 June 2011, compared with £8.8m in the same period last year. Revenue is down from £533.4m to £468.5m following its strategy to “withdraw from low margin activity”.
The firm has made two acquisitions in the last five months, including industrial support services firm Promanex for £16.4m this week and oil and gas consultancy ClerkMaxwell in April 2011 for £3.2m. After these acquisitions and organic growth, 25 per cent of group revenues now come from consultancy and operations and maintenance activities.
In infrastructure, revenue, including share of joint ventures and associates, was £219.4m (2010: £223.8m), with profit from operations of £5.7m (2010: £8m). It put this drop down to a greater number of project completion bonuses and gain share in the first half of 2010. It also said its margin was hit by a higher level of bidding activity, and a provision for additional cost to complete on a project.
In environment, revenue was £159.8m (2010: £246.7m), with profit from operations of £6.7m (2010: £1.2m), put down to the lower margin activities, and a slower than anticipated start to the AMP5 programme of work.
Chairman David Allvey said: “The implementation of our ‘Choosing Costain’ strategy is transforming the group, as we continue to develop or acquire the skills and capabilities to reinforce our position as one of the UK’s leading Tier One engineering solutions providers.
“Looking ahead, despite continuing challenging market conditions, we see significant opportunity for the continued successful implementation of our strategy and the delivery of the board’s ambition of doubling profit over the medium term. The board expects to report continued progress at the year-end in line with its expectations.”
The firm has topped up its cash in bank from £133.9 to £149.2m. Total banking and bonding facilities recently increased by £90m to £435m. It has an order book of £2.3bn (June 2010: £2.5 bn), and is preferred bidder on £400m of schemes. The firm said repeat order customers account for in excess of 80 per cent of order book. Over £900m of revenue secured for 2011 at half-year.
In energy and process, revenue, including share of joint ventures and associates, was £88.6m (2010: £62.4m), with a profit from operations of £1.7m (2010: £3.1m).
It is expecting £44.5bn to address the lifetime and clean-up costs associated with the current decommissioning programme, along with £110 billion over the next decade to provide a new generation of secure low carbon electricity powered by a mix of renewable energy, new nuclear and fossil fuel power stations.