UK-based Costain Group PLC (GB:COST) launched a new share buyback plan worth £10 million after reporting an 8.7% year-over-year growth in its operating profit to £16.3 million for H1 2024. The company highlighted its improved balance sheet and strong long-term prospects in its results for the first half of FY24. Consequently, Costain shares surged by nearly 5% as of writing.
Costain offers a wide range of infrastructure solutions across multiple sectors, including energy, rail, transportation, and defence.
Costain Delivers Improved H1 Margins
In the first half, Costain’s revenue fell by 4% year-over-year to £639.3 million. This decline was mainly due to reduced earnings in its transportation sector, partially offset by growth in the company’s natural resources division.
Meanwhile, the company’s adjusted operating margin grew by 20 basis points to 2.5%, driven by growth in the transportation and natural resources divisions. The company further stated that it remains on track to achieve its margin targets of 3.5% for FY24 and 4.5% for FY25.
Additionally, Costain declared an interim dividend of 0.4p per share, similar to last year’s interim payment.
Costain’s Strong Prospects
At the end of the first half, Costain’s forward work position remained robust at £4.3 billion, with contracts across all its sectors. Costain has already secured contracts worth at least £500 million in the water sector so far in the second half of the year.
The company stated that it is well-positioned to benefit from increased investment in Britain’s water infrastructure. According to the guidance from the U.K. water regulator Ofwat, it could more than double its investment in the next regulatory period, reaching the highest level in decades. As a result, Costain expects additional water contracts in the second half of the year.
Year-to-date, Costain Group stock has gained almost 50% in trading.
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