Increased operating profit, margin and forward work underpins Costain confidence in FY 25 expectations

by Kevin Borras

Costain has released its results for the Half Year ended 30 June 2025, with the main takeaway being the company brought in over half a billion pounds of revenue in the first six months of the year. Among the highlights were:

Revenue of £525.4m (H1 24: £639.3m), with growth in Natural Resources offset by a reduction in Transportation from expected Road project completions and a rephased schedule from HS2.
Quality of contracts and strong execution drives 3.1% increase in adjusted operating profit to £16.8m (H1 24: £16.3m) and a 70bps rise in adjusted operating margin to 3.2% (H1 24: 2.5%).
Confident in delivery of adjusted operating margin run-rate target of 4.5% during FY 25.
Reported operating profit increase of 18% to £16.4m (H1 24: £13.9m), reflecting a reduction in adjusting items following the completion of the Transformation programme.
Adjusted EPS of 5.5p (H1 24: 5.6p), with adjusted operating profit increase offset by lower net finance income. Reported EPS of 5.4p (H1 24: 5.0p).
Increased high quality forward work position of £5.6bn (FY 24: £5.4bn, H1 24: £4.3bn), more than four times FY 24 revenue, and bidding activity levels remain high.
Strong balance sheet, with net cash of £144.9m (FY 24: £158.5m, H1 24: £166.0m), year-end net cash expected to be around £170m.
Enhanced shareholder returns, with significant increase in interim dividend to 1.0p (H1 24: 0.4p) reflecting normalisation of H1:H2 dividend split and a further £10m share buyback programme launched in H1 25.
Improved quality of earnings, business resilience and market momentum drive confidence in delivery of FY 25 and medium-term expectations.

Alex Vaughan, Costain’s Chief Executive, commented:

“We have delivered another strong performance in the first half of 2025. Growth in adjusted operating profit and margin reflects the improving quality of our contract portfolio, and we remain confident that we will deliver our adjusted operating margin run-rate target of 4.5% during FY 25, building on the significant growth in adjusted operating profit achieved since FY 21. Our strong net cash position, progression in our dividend and share buyback programme are creating substantial value for shareholders.

“We continue to win new work and add new customers in growth markets that provide essential infrastructure, expanding our forward work position to £5.6bn, more than four times FY 24 revenue. We have already secured 90% of our forecast revenue for the year and our bidding activity levels remain high.”

“The Government’s new Infrastructure Strategy and Infrastructure Pipeline, together with recent regulatory determinations in water, energy and aviation, provide clarity and confidence in the significant growth opportunities in our target markets. We are delivering our strategic priorities, investing in the business to support these attractive growth opportunities and are increasingly confident in the Group’s growth prospects.”

(Pic: Costain)