{"id":618043,"date":"2023-03-14T07:30:00","date_gmt":"2023-03-14T12:30:00","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/03\/14\/costain-returns-to-profit-despite-17m-water-contract-provision\/"},"modified":"2023-03-14T07:30:00","modified_gmt":"2023-03-14T12:30:00","slug":"costain-returns-to-profit-despite-17m-water-contract-provision","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/03\/14\/costain-returns-to-profit-despite-17m-water-contract-provision\/","title":{"rendered":"Costain returns to profit despite \u00a317m water-contract provision"},"content":{"rendered":"
\n

Costain has returned to profit despite registering a \u00a317m provision to rectify work at a water-treatment facility.<\/span><\/p>\n

The contractor posted a \u00a332.8m pre-tax profit for the year ending 31 December 2022, reversing the \u00a313.3m loss made the previous year. Costain\u2019s revenue was also up, at \u00a31.42bn compared with \u00a31.14bn the year before.<\/span><\/p>\n

Chief executive Alex Vaughan said the return to profit was largely thanks to Costain \u201cbroadening the services that we provide to customers\u201d. As well as working as a contractor, the firm is expanding its work as a consultancy in the defence and energy sectors.<\/span><\/p>\n

Costain said the growth was driven by \u201cincreased volumes in complex-programme delivery\u201d, the impact of inflation, and increased revenue, particularly in the energy and defence sectors.<\/span><\/p>\n

The loss in 2021 was<\/span> mainly caused by a \u00a343.4m settlement with National Grid<\/span><\/a> over a contract it had terminated in Peterborough and Huntingdon \u2013 with Vaughan saying at the time that he was \u201cvery confident [the] legacy issues are solved\u201d.<\/span><\/p>\n

But the firm still made a \u00a317m provision in its latest accounts to cover \u201crectification works\u201d at an unnamed water-treatment facility for which Costain was the contractor. The firm has paid \u00a34.8m of the \u00a317m provision to date.<\/span><\/p>\n

Costain said the remediation work should be completed in 2024, but warned that the final design solution \u201chas not been finalised\u201d, and that it has had to make a number of assumptions over the cost estimate. That means the \u201cultimate cost\u201d of the provision could be up to 30 per cent larger than the current provision suggests, the company admitted.<\/span><\/p>\n

Vaughan told <\/span>Construction News that <\/span><\/i>Costain had been \u201cworking with our customer and our insurers and the supplier\u201d to get the issue resolved, and that the cost of the rectification would be \u201crecovered through insurance\u201d.<\/span><\/p>\n

\u201cSo, effectively, it’s been amicably resolved by all the parties working together to get it closed out,\u201d he said.<\/span><\/p>\n

Costain has also been restructuring parts of its business over the past year to \u201cdeliver operational efficiencies\u201d. The contractor registered a \u00a35m provision for that over the course of the year.<\/span><\/p>\n

Vaughan said the aim of the programme was to make the firm \u201cmuch more productive, efficient and effective\u201d. Part of that project has involved working with clients to assess their forward business plans and to find opportunities for digital programmes that could improve efficiencies for both parties, he explained.<\/span><\/p>\n

The optimisation programme should help Costain to improve its adjusted operating margin in the coming years, Vaughan said. In 2024, he is expecting the firm to make a margin of 3.5 per cent, which should rise to 4.5 per cent the following year \u2013 leaving Costain on track for its long-term plan of making a 5 per cent margin.<\/span><\/p>\n

Following the government\u2019s announcements about HS2 last week, which pushed back work on<\/span> phase 2a and the building of Euston station<\/span><\/a>, Vaughan said he was \u201cmindful of the macroeconomic environment\u201d and the challenges created by inflation for government and other clients.<\/span><\/p>\n

But he also emphasised his firm\u2019s renewed focus on defence and energy, and predicted much more investment in the water, defence and energy sectors.<\/span><\/p>\n

\u201cIt’s important not to just focus on one project, but actually to step back and look at the whole infrastructure ecosystem, and look at the significant investment that\u2019s been made in that area,\u201d he said.<\/span><\/p>\n

Looking ahead to tomorrow\u2019s budget, Vaughan said he would like to see continuity on the \u201cclear commitments\u201d made to<\/span> infrastructure investment in the government\u2019s autumn statement<\/span><\/a> last year.<\/span><\/p>\n

\u201cWhat we don\u2019t want is any surprises,\u201d he said. \u201cWhat business likes is certainty. Therefore, what I would hope to see is just continuity and consistency with what\u2019s been said previously.\u201d<\/span><\/p>\n<\/p><\/div>\n

Read More<\/a>
\n Joshua Stein<\/p>\n","protected":false},"excerpt":{"rendered":"

Costain has returned to profit despite registering a \u00a317m provision to rectify work at a water-treatment facility. The contractor posted a \u00a332.8m pre-tax profit for the year ending 31 December 2022, reversing the \u00a313.3m loss made the previous year. Costain\u2019s revenue was also up, at \u00a31.42bn compared with \u00a31.14bn the year before. Chief executive Alex […]<\/p>\n","protected":false},"author":1,"featured_media":618044,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[101450,534,530],"tags":[],"class_list":{"0":"post-618043","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-costain","8":"category-financial","9":"category-returns"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/618043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=618043"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/618043\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/618044"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=618043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=618043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=618043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}