Costain hints at renewed dividend after four years

Infrastructure company Costain has hinted that it could be close to paying shareholders a dividend for the first time in several years.

The company, which has contracts on the HS2 project and on several roads across the UK, said the board was considering the payments, and would make an announcement “shortly”.

Dividends have been paused at Costain since partway through 2019.

It skipped the final payment for that year as Covid-19 gripped the economy.

But since then performance has improved enough that the business seems on the verge of bringing the payments back.

“The increase in operating performance and the positive outcomes regarding the pension review and refinancing enables the board to consider the resumption of dividend payments, including the payment of an interim dividend in respect of the period to June 30 2023,” said chief executive Alex Vaughan.

The business said it was keeping an eye on the poor economic circumstances, and the fact that the Government has decided to change the phases and scope of some major transportation contracts.

In March this year, the Government said part of the HS2 rail project would be delayed for two years, which ministers thought would save money.

“There remains a positive outlook across our markets, while recognising the short-term rephasing of the Government’s transport spending,” Mr Vaughan said.

The company said its joint venture which is working on HS2 has three of seven of its tunnel boring machines in operation.

Two of these have completed one mile of tunnelling.

Construction workers have shipped off more than one million tonnes of spoil in the process.

The business said pre-tax profit had dropped from £11.2 million to £8.3 million in the six months to the end of June, while revenue fell 0.1% to £664 million.

Mr Vaughan added: “While we are mindful of the macroeconomic backdrop, recognising the timing of customer procurement cycles, the quality of our secured and preferred bidder work gives us good visibility on future revenue, with more than 90% of revenue secured for the remainder of 2023.

“Our expectations for 2023 remain unchanged and we continue to be confident in the group’s long-term prospects.”