After three consecutive years of making a pre-tax loss, dogged by loss-making contracts, Costain has posted results for 2022 showing a pre-tax profit of £34.2m on revenue up 25% at £1,421m (2021: £1,135m).
In the previous three years, Costain had made pre-tax losses of 13.3m in 2021, £96.1m in 2020, and £6.6m in 2019.
The order book shrank from £3.4bn to £2.8bn during the course of the year. This was attributed to the timing of major contract bids, customer investment programmes, being more picky over contracts to go for and the shorter lead time of the sort of consultancy work for which Costain is increasingly pitching.
However, the preferred bidder book grew from £900m to £1.6bn, including the A66 upgrade across the Pennines – a £1.3bn contract shared with Balfour Beatty, Keltbray and Kier.
Costain ran into trouble on the Peterborough & Huntingdon gas compressor project for National Grid and the A465 Heads of the Valley road construction job for the Welsh government, but these are now history.
Chief executive Alex Vaughan said: "Our performance in 2022 delivered strong growth in revenue and operating profits, with significant free cash flow, ending the year with a net cash position of £123.8m. I am pleased that we have grown our core complex programme delivery revenue and further strengthened our consultancy market position. Consequently, we are seeing good opportunities emerge in our chosen sectors, at margins we aspire to.
"Costain has effectively negotiated the challenges of material availability and inflation, as well as delays to some contract awards, delivering a robust operational performance. We expect to increase margins as we enact further operational improvements in the business during 2023 and beyond, and as we continue to grow the scale of our consultancy services.
"While we are mindful of the macro-economic backdrop, the quality and nature of our secured and preferred bidder work gives us good visibility on future revenue and we remain confident in the group's strategy and long-term prospects."
Got a story? Email news@theconstructionindex.co.uk
