Costain swings to £96m loss in ‘exceptionally challenging’ year during pandemic
Infrastructure firm Costain has swung to a loss of almost £100m as it struggled through an “exceptionally challenging year” during the pandemic.
The group posted a statutory reported loss before tax of £96.1m for the 12 months to 30 December, down from a profit of £6.6m in 2019.
The figure included significant sums from two long-standing contracts, including a £94.7m hit in relation to the Peterborough & Huntingdon gas station job and and the A465 Heads of the Valleys road road scheme.
The group said “clear lessons have been learnt from these events”, adding that Costain has taken “decisive action to prevent such issues reoccurring”.
The construction company also confirmed a one-off charge of £5m in relation to closing out the ASF south highways legacy contract.
Revenue for the year fell to £1.07bn, down from £1.18bn in 2019, as major projects including Crossrail, HS2 and the Thames Tideway scheme in London ground to a halt during lockdown.
Shares jumped three per cent to 71.5p at market open.
The group improved its net cash position, with £102.9m cash in the bank at the year end. Costain said it remained “confident in delivering growth in profits and margins in 2021” through a “substantial and growing infrastructure market”.
It pointed to decisive action undertaken at the start of the pandemic to reduce the firm’s cost base and bolster its financial position.
Costain, which employs around 3,400 people across the country, slashed executive salaries by 30 per cent at the outbreak of the pandemic. It received £2m from the furlough and also took the decision to defer VAT of £10m under an agreed UK government scheme.
“Overall, in 2020 the estimated financial impact of Covid-19 was mitigated to a reduction in our profitability of £9.2m,” the group said. “Last year was an exceptionally challenging year as we worked hard to successfully manage the operational impact from Covid-19 and maintain effective operations for our clients.”
Alex Vaughan, chief executive, said: “Last year was a challenging year but I am proud of how well everyone at Costain responded and the resilience shown across our business which enabled us to continue to operate effectively with strict Covid-19 safety measures in place.
“The UK government has provided a clear strategic framework for UK infrastructure investment, underpinned by long-term underwritten investment programmes to support the UK Government’s drive to level-up economic growth and to meet decarbonisation commitments. I am confident that Costain is in a good position to capitalise on the opportunities in front of us and to grow our profits in 2021.”