(Alliance News) - Infrastructure services firm Costain Group PLC on Tuesday said it will focus on higher margin activity, just a few days after warning on 2019 earnings.
Chief Executive Alex Vaughan, who joined the firm only in May, is to unveil Tuesday his "Leading Edge" strategy for the company.
This will see Costain accelerate the deployment of higher margin services, such as consultancy and advisory work, asset optimisation, and digital technology.
"Through a combination of organic and acquisitive growth, the group's ambition is to derive over half of its business from higher-margin services, targeting a blended divisional margin range of 6% to 7% over the medium-term," said Costain.
Costain has reorganised into two new divisions: Transportation, which includes rail, highway, and airport work, and Natural Resources, which includes water, energy, and defence operations.
On Friday last week, Costain warned underlying operating profit for 2019 is expected to be in the range of GBP38.0 million to GBP42.0 million. Last year, underlying operating profit totalled GBP52.5 million.
This comes after a number of project issues, including the M6 smart motorway, the cancellation of the M4 corridor project in Wales, and the Preston distributor road.
Shares were up 0.4% on Tuesday morning in London at 181.07 pence each, having closed at 308.50p on Thursday last week prior to the profit warning.
Costain (COST)