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(Alliance News) - Costain Group PLC on Friday said 2019 earnings will take a hit from delays to the timing of certain contracts.
Shares in the company were trading 39% lower on Friday morning in London at 188.10 pence a share.
The infrastructure solutions company said revenue secured to-date for 2019 is GBP1.1 billion, down from GBP1.49 billion reported for 2018. Revenue secured for 2020 is GBP900 million compared to GBP850 million for 2019 at the same stage last year.
The first-half results will also include a one-off charge of GBP9.8 million, the company noted.
Costain said it has recently seen a number of delays to the timing of contract start dates and new awards. Projects affected include the M6 Smart Motorway, Preston distributor road and HS2 Southern Section main works.
Additionally, the M4 Corridor around Newport project was cancelled by the Welsh government earlier in June.
As a result, the company said it now expects lower revenue for 2019 and underlying operating profit for the full year is expected to be in the range of GBP38.0 million to GBP42.0 million. Last year, underlying operating profit totalled GBP52.5 million.
More positively for Costain, order book is GBP4.2 billion, up from GBP3.7 billion reported in June 2018. Trading on current contracts during the first half has been in line with expectations, Costain said.
New orders secured in the first six months of this year include the A19 improvement contract and long term AMP7 awards for Severn Trent Water, United Utilities Group PLC and Yorkshire Water which have strengthened the company's position in the water market.
"Despite delays to the timing of certain contract start dates and new awards, our markets are strong, as evidenced by the breadth of our new contract awards in the first half," said Chief Executive Alex Vaughan.
"We have a strong balance sheet, profitable operations and a broad range of capabilities to support the growth of the business. Costain is well placed to secure the opportunities ahead of us," added Vaughan.
