UK-based Costain Group PLC (GB:COST) shares rallied over 7% after the company announced the potential revival of dividends in its first-half earnings report for 2023. The company’s overall performance was hit by the additional costs incurred in the company’s ongoing transformation program. Nonetheless, it still delivered growth in adjusted operating profits along with a positive cash position. Overall, the company remains steadfast in its outlook for the full year 2023, with 90% of the second-half revenue already locked in.
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The shareholders reacted positively to the dividend comeback news, and the shares traded up by 7.79% on Wednesday. The share price performance has remained favorable in 2023, with a gain of 28.5% YTD.
Costain is a UK-based company that provides a wide range of infrastructure solutions across various sectors like energy, rail, transportation, defence, etc.
Costain H1 Results 2023
For the first half, revenues mostly remained flat at £664.4 million as compared to £665.2 million in the same period last year. The company’s adjusted operating profit increased by 7.1% to £15 million, driven by higher volumes and better margins in its Natural Resources division, offsetting the decline in its Transportation segment. The company managed to enhance its net cash position, which grew by 37.7% to £132.1 million as compared to £95.9 million last year. This reflected sustained effective management of working capital and was further boosted by favorable cash collection timing during the period.
The order book stands at £2.5 billion, and the preferred bidder book is at £1.5 billion, which provides favorable visibility of future top-line growth. This comprehensive outlook on our future prospects becomes more pertinent as the company expects to transition its business composition towards the preferred bidder book. It is actively looking at long-term project acquisitions spread over 5–10 years, ensuring a dependable flow of work.
The major highlight of the results was the renewal of dividends for shareholders. The board stated that it is currently considering renewing its dividend payments and could announce an interim payment soon for 2023. Looking at its strong cash position, the company is looking to pay a dividend that covers three times its underlying earnings.
