(Alliance News) - Costain Group PLC on Wednesday reported a significant decrease in earnings in the first half of 2019 due to contract delays, but said it is on track to deliver growth in 2020.
The stock was up 10% in early trade on Wednesday at 160.60 pence a share.
The infrastructure construction and engineering firm said its revenue declined 22% in the six months to the end of June to GBP594.1 million from the GBP758.7 million reported a year earlier, resulting in a reduction in pretax profit to GBP8.4 million from a restated GBP19.9 million.
Costain reported underlying operating profit of GBP21.2 million for the half-year, lower than GBP23.2 million posted a year prior. Underlying operating margin increased however to 3.5% from 3.0% year-on-year, benefiting from a continuing improvement in the natural resources division and a "good" performance in the transportation division.
In late June, Costain warned underlying operating profit for all of 2019 is expected to be in the range of GBP38.0 million to GBP42.0 million. In 2018, underlying operating profit was GBP52.5 million, so it will be down by as much as 28% in 2019.
"While, as previously announced, delays to certain contract start dates and new awards, together with a contract cancellation will impact our full year performance, we are pleased that the group has continued to secure significant new work during the first half," said Chief Executive Alex Vaughan.
"We therefore remain on track to deliver our revised expectations for the current year and growth in 2020," added Vaughan.
The company is paying a 3.8 pence a share dividend for the first half, down from 5.15p paid a year ago.
Costain (COST)