Engineering group Costain are hungry for more takeovers

ONE of Britain’s biggest engineering groups, Costain, predicted more takeovers and mergers in the industry yesterday as it racked up record first-half orders of £3.2billion.

London’s St Pancras Costain has worked on high-profile projects such as London’s St Pancras [GETTY]

A day after a the collapse of Carillion’s hoped-for £3billion merger with Balfour Beatty, Costain chief executive Andrew Wylie said he was looking for takeover targets adding that “customer behaviour is driving consolidation”. 

Finance director Tony Bickerstaff said: “In the market place, customers are looking for fewer suppliers.” 

Costain’s record order book is for a number of major infrastructure projects. Wins included Network Rail’s £2billion electrification programme, parts of London’s Crossrail project and a contract for Centrica's gas terminals. 

Costain reported pre-tax profits of £5.8million in the first half, an 87 per cent jump on the same period last year on revenues up from £462.9million to £529.1million. 

In the market place, customers are looking for fewer suppliers

Tony Bickerstaff, Costain finance director

Revenues from infrastructure projects rose 36 per cent to £358.7million. However, revenues at its natural resources unit fell 15 per cent to £169.4million as it was hit by further costs of a waste disposal project in Greater Manchester. 

Wylie said the company was in rude health, pointing to the 1,000 more staf fit had employed in the past 12 months, adding that Costain would look to make acquisitions. 

Costain – which has worked on high-profile projects such as London’s St Pancras and the Channel Tunnel – benefited from a £70million capital injection this year. 

Its current projects include one of the largest nuclear decommissioning projects in the UK at Sellafield, Cumbria, and the redevelopment of London Bridge Station. 

Analysts broadly welcome the results. Liberum highlighted its “unrivalled customer focus”, though some suggested it had been slow on the acquisition trail. The shares fell 3¼p to 269¾p.

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