Costain’s Share Price Rallied 5.73% on Its Upbeat FY 2023 Results

The Costain Group PLC (LON: COST) share price rallied 5.73% after releasing its financial results for the year ended 31 December 2023. The company revealed that its operational profit, after adjustments, saw an 11% rise to £40.1 million for the fiscal year, up from £36.3 million in the previous period.

The increase was primarily driven by higher sales volumes and improved margins in the Natural Resources sector, alongside a steady performance in the Transportation sector. The reported operational profit stood at £26.8 million, down from £34.9 million, due to costs associated with repositioning digital services and a transformation program. 

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The British construction and engineering company also reported a substantial increase in net cash, which rose by £40.6 million to £164.4 million, compared to £123.8 million in the previous year. The adjusted free cash flow remained robust at £72.0 million, slightly below the £72.9 million recorded previously.

For the fiscal year, the adjusted operating margin improved to 3.0% from 2.6%, with a notable increase to 3.8% in the second half, up from 2.9%. The company is on a clear path to achieving its projected margin goals of 3.5% and 4.5% for the upcoming fiscal years.

Earnings per share (EPS), adjusted for specific factors, increased 23% to 12.2p, driven by the enhanced net cash position and a rise in adjusted operating profit. The reported EPS was 8.1p, reflecting various adjusting factors, down from 9.4p.

The company’s future work prospects appear strong, with an order position of approximately three times the fiscal year’s revenue. It also proposed a final dividend of 0.8p per share, leading to a total annual dividend of 1.2p, a significant change from the previous year, where no dividend was distributed.

Both reported and adjusted revenue reached £1,332.0 million, down from £1,421.4 million, with growth in Natural Resources and stable operations in Transportation, despite some project volume reductions due to rephasing and rescoping within the division.

The company remains on track to meet its financial targets for the next two fiscal years. More than £1 billion in revenue has already been secured for 2024, covering over 80% of the anticipated revenue. 

It has maintained a strong order and preferred bidder book position, equating to about three times the fiscal year’s revenue at £3.9 billion, albeit slightly decreasing from £4.4 billion. 

Costain share price. 

The Costain share price rallied 5.73% to trade at 72.0p from Monday’s closing price of 68.1p.