Costain Group PLC (LSE:COST) reported profits growth of 22% for the first six months, boosted by volume increases and inflation protection clauses built into its contracts.
The construction company left its full-year expectations unchanged with profit predicted to show “good” growth on the back of new contracts.
Adjusted operating profit was £14mln in the half-year to 30 June 2022, up from £11.5mln in the same period last year, with growth seen in both the Transportation and Natural Resources divisions.
Revenue grew by 19.5% to £665.2mln, driven by increased volumes in the Rail and Road operations, inflation recovery mechanisms included in its Transportation contracts and improved revenue in the Natural Resources business.
Adjusted free cashflow was £34.4mln and the net cash position at end-June was £95.9m, with a positive net cash flow expected in the second half.
"Despite material availability and inflation challenges, we have managed the supply chain pressures effectively, while delivering a robust operational performance with new contracts being won on attractive commercial terms with appropriate risk,” said CEO Alex Vaughan.
The company’s order book stood at £2.7bn at the end of June, down from £4bn a year earlier. It predicted a strong increase in the full-year order book as new contracts are awarded over the coming months.
“Our four chosen markets of Transport, Water, Energy and Defence remain resilient, and the pipeline of potential new business is healthy. We undertook a very high level of bidding activity in the first half, with award decisions expected in H2 22 and in H1 23,” said Vaughan.
"While we remain mindful of the macro-economic backdrop, we are pleased with the quality and scale of our order book, including secured multi-year infrastructure programmes, the volume of preferred bidder work and the additional long-term framework contracts which will deliver continued progress in 2023 and beyond," he said.
Shares were 1.72% higher at 40.18p in early trade.