Costain enforces high-tech approach as profits blossom
Costain Group reported growing profit margins this morning in the wake of a business shift towards technology-driven markets.
Underlying profit climbed to £22.8m during the first six months of 2018, rising eight per cent from the same period in the previous year.
The FTSE Small Cap infrastructure contractor announced an eight per cent hike in its interim payout as a result of the strong margins, while shares rose 3.24 per cent to £4.45.
However, revenues over the same period fell 12 per cent to £115m, which Costain said was a result of "the changing mix of the group's activities".
Read more: Carillion was "like a Ponzi scheme" with a "culture of fear"
With roughly one in three employees of Costain now involved in consultancy or technological roles, the constructor has made high-tech a core focus of its business model, with future plans for an expansion to a "new enlarged technology centre".
Andrew Wyllie, chief executive of Costain, said: "We delivered another good performance in the first half of the year due to our differentiation as we evolve into the UK's leading smart infrastructure solutions company.
"The shape and nature of our activities continues to develop, reflecting our clients' changing needs and their demand for integrated solutions to improve the performance and capacity of their assets."
Wyllie said that the company was set to meet its full-year expectations following the results today. Earlier this week it won a Highways England contract to help design, install and implement one of the UK's trial 'smart' roads, the A2M2 connected vehicle corridor in Kent.
“Some in the market were possibly hoping for better news today judging by the fact that the shares dropped back 1.5% in early trading, but these are solid figures and the rise in profit margins is positive for investors," said Ian Forrest, investment research analyst at The Share Centre.
“There is a general consensus across both main political parties that the UK’s infrastructure requires improvement and Costain looks set to be a beneficiary of this in future years. We continue to recommend the shares as a long-term buy for a medium risk balanced portfolio.”
Read more: Dominic Raab 'confident' UK will reach deal with EU by October