Costain Group (COST) H1 2024 earnings summary

Executive summary

• Achieved strong H1 2024 results with adjusted operating profit up 8.7% to £16.3m and reported operating profit up 82.9% to £13.9m, supported by robust financial position and positive free cash flow.

• Revenue for H1 2024 was £639.3m, reflecting growth in Natural Resources and a planned reduction in Transportation.

• Forward work position increased to £4.3bn, more than three times annual revenue, with significant contract wins, especially in Water and at least £500m secured post period-end.

• Announced a £10m share buyback and maintained interim dividend at 0.4p per share, reflecting strengthened financial health.

• Strategic focus on essential UK infrastructure, broadening customer base, and expanding consultancy alongside construction expertise.

Financial highlights

• Adjusted operating margin improved to 2.5% (up 20bps YoY); adjusted EPS up 27.3% to 5.6p.

• Free cash flow was £14.2m, lower than last year due to timing differences, higher tax, and CapEx.

• Net cash position at half-year was £166.0m, with average month-end net cash at £173.9m.

• Group revenue decreased 3.8% year-over-year; Natural Resources revenue up 10.0%, Transportation down 8.8%.

• Adjusted profit before tax up 22.0% to £19.4m; reported profit before tax doubled to £17.0m.

Outlook and guidance

• On track to deliver adjusted operating margin of 3.5% in 2024 and 4.5% in 2025, with ambitions for margins above 5%.

• Year-end net cash expected to be at least similar to half-year, excluding the £10m buyback.

• Forward work position provides strong visibility, with further contract wins expected in H2.

• Positive outlook supported by government infrastructure priorities, regulatory investment in water and energy, and ongoing operational improvements.

• FY24 expectations remain unchanged.