Costain shares tumble after HS2 delays spark revenue slump
Shares in Costain tumbled 13 per cent in the opening minutes of trade in London after the construction firm was hit by further delays to HS2.
The Bishopsgate-based business said its overall revenue fell 17.8 per cent to £525m for the first six months of the year, of which revenue for its rail infrastructure services slumped 23.3 per cent to £185m.
Costain said the fall was “due to the development of a new integrated programme schedule for HS2, which is rephasing elements of our contracted activities in the short term into future years.
“The HS2 programme continues to be navigating a change in its programme delivery strategy.”
Costain shares fell 14.2 per cent to 140p on Wednesday.
The sales slide came after the government warned the opening of HS2 was set to be delayed beyond its original target date of 2033, but could not confirm when the new high speed London-Birmingham line would now likely open.
Transport Secretary Heidi Alexander said a “litany of failures” had led to delays and increased costs, telling the House of Commons: “It gives me no pleasure to deliver news like this.
“Billions of pounds of taxpayers’ money has been wasted by constant scope changes, ineffective contracts and bad management.”
Stronger medium-term infrastructure outlook
Despite the delays, Costain said the last three of its four tunnel boring machines in the Northolt Tunnel successfully completed their drives safely and on schedule, a significant milestone for the HS2 project as it completed the twin-bore tunnel between West Ruislip and Old Oak Common, a new station designed to connect HS2 with the Great Western Railway from Paddington.
The company’s road infrastructure revenue more than halved to £83m during the period. Costain said this was driven by a reduction in National Highways schemes revenue as specific projects were completed or near completion, a fall which was partially offset by growth in contracts with Transport for London.
But Costain said it was heartened by spending commitments in the government’s 10-year Infrastructure Strategy and Infrastructure Pipeline, adding it expected to see a “step change in performance” in the business in 2027.
“Whilst we remain mindful of the near term macro-economic and geopolitical environment and the potential consequences of government spend phasing decisions, the improvements in market outlook and the group’s positioning and resilience underpin our confidence in delivering on our expectations for further progress,” the firm said.