Costain wins contract with Northumbrian Water, FY net cash ahead of expectations

10th Jan 2024 08:17

(Sharecast News) - Construction and engineering company Costain announced on Wednesday that it has been appointed by Northumbrian Water to shape, create and deliver its strategic infrastructure upgrade programme.

Costain stated the framework will see it awarded with contracts with a potential value of up to £670.0m over 12 years, with the group working with both NWG and its partners. The contract starts immediately and will run for a seven-year initial term with an option for a five-year extension.

The London-listed group also noted that it has had "a positive trading year" in 2023 and expects to deliver adjusted operating profits in line with market expectations. As a result, and reflecting an increase in financial income compared to 2022 and strong working capital management, Costain has ended 2023 with a net cash position of £164.4m, significantly higher than market expectations of £128.6m.

Chief executive Alex Vaughan said: "This contract win not only reflects our continued growth in the water sector, but it also reinforces our commitment to improving critical infrastructure in the North-East of England. This includes major upgrades to the region's highways and our carbon capture work in Teesside as part of the East Coast Cluster, generating opportunities for regional suppliers and employment for local people.

"We are also pleased to report that we have had a positive trading year and expect to deliver adjusted operating profit in line with market expectations. Our cash performance has been very strong, driven by continued improved operational performance, an increase in financial income compared to 2022, and ongoing positive working capital timings."

As of 0920 GMT, Costain shares were up 5.89% at 66.29p.

Reporting by Iain Gilbert at Sharecast.com