Infrastructure firm Costain swung to a loss after taking a £95m hit on two problem contracts, it announced this morning.
Costain reported a loss before tax of £92.3m in the first half of the year, compared to profit of £8.4m last year.
Revenue also dropped from £594.1m to £459.9m during the period.
The company posted a loss per share of 49.9p, down from earnings per share of 6.1 per for the first six months of last year.
Why it’s interesting
Costain took a £49.3m hit on a contract in Peterborough and Huntingdon and announced a £45.4m charge on the Welsh A465 Heads of the Valley project.
The company has taken action to mitigate further risk, including improving its contract selection processes.
Costain said it is no longer pursuing Energy EPC contracts to focus on long term investment programmes.
It has also revamped its leadership team roles, with Sue Kershaw joining as managing director for transportation.
Meanwhile the company said it was confident that it would deliver profit growth next year despite the impact of the coronavirus pandemic.
What Costain said
Chief executive Alex Vaughan said: “”We are clearly disappointed with the recent arbitration outcome in relation to the A465 contract which, together with the mutual termination of the Peterborough & Huntingdon contract, has resulted in significant revenue adjustments for these long-standing projects. We have in place clear actions to resolve the financial position on these contracts and importantly we have taken decisive action to prevent such issues from reoccurring…
“Looking ahead, assuming no further sustained COVID-19 lockdowns, we are confident of delivering growth in profits and margins next year. Although we are mindful of the macro-economic uncertainties ahead, Costain is in a strong position with secured long-term programmes and a positive market backdrop, in particular the UK Government’s drive to progress investment in infrastructure so that it is better, greener and faster in support of the nation’s economic recovery.”