Costain Group (COST) H1 2025 earnings summary

Executive summary

• Operating profit and margins increased in H1 2025, with adjusted operating profit up 3.1% to £16.8m and margin rising to 3.2%, driven by strong Natural Resources performance offsetting Transportation declines.

• Revenue was £525.4m, down 17.8% year-over-year due to lower Transportation revenue, while Natural Resources grew.

• Forward work position reached £5.6bn, over four times last year's revenue, with 90% of FY 25 forecast revenue secured, providing high visibility for future growth.

• Net cash remains robust at £144.9m, with year-end guidance of £170m and enhanced shareholder returns via increased dividend and £10m share buyback.

• Confident in meeting FY 2025 profit consensus of £46m and margin above 4%, with strong balance sheet and market outlook.

Financial highlights

• Adjusted operating profit rose 3.1% to £16.8m; reported operating profit up 18% to £16.4m.

• Adjusted operating margin improved by 70bps to 3.2% year-over-year.

• Adjusted EPS was 5.5p (down 1.7%); reported EPS up 8% to 5.4p.

• Interim dividend increased 150% to 1.0p per share.

• Net cash at period end £144.9m; average month-end net cash £149.4m; adjusted free cash outflow £3.0m.

Outlook and guidance

• On track to deliver 4.5% adjusted operating margin run rate in FY 2025, targeting margins above 5% in the medium term.

• FY 2025 operating profit consensus at £46m, with margin expected to exceed 4%.

• 90% of forecast revenue for FY 25 already secured; high bidding activity continues.

• Step-change in revenue, profit, and margin growth anticipated for FY 2027 and beyond, underpinned by high-quality contract portfolio and strong forward work.

• High confidence in delivering progress for FY 2025 and FY 2026.