Costain’s boss has explained the “mutual agreement” behind the firm’s departure from the Hinkley Point C tunnelling and marine works.
The comments came as Costain revealed underlying operating profits are up 34% to £21M during its half-year financial update today.
The company said it had been “unable to agree final terms and conditions for the overall completion of the works” at Hinkley Point C, which were worth £350M to the firm.
On Monday (21 August) Balfour Beatty announced it had replaced Costain as preferred bidder for the tunnelling and marine works package at Hinkley for energy giant EDF, covering three 9km long cooling tunnels. Costain had been appointed in 2013 but blamed changes in the market and delays in the project for its decision to step back.
“We are not a risk-free business but we’ve got very clear and robust criteria [on] the risks that we’ll take, as you’ve seen from the decision to agree not to agree on Hinkley, and it’s that improved risk profile that’s leading to continued growth in the profitability of the business, with customers coming back at 90% repeat order because we are rapidly changing and transforming the service that we’re providing to them,” said Costain chief executive Andrew Wyllie.
Costain also said it was “setting out its stall to become the UK’s leading smart infrastructure solutions company” as a result of an increasing reliance on technology in the sector.
“We are transforming rapidly to differentiate Costain as the UK’s leading smart infrastructure solutions company. We are delivering technology-based solutions demanded by our clients who are spending billions of pounds, underpinned by legislation and regulation, to meet ever more complex challenges to enhance the nation’s infrastructure,” said Wyllie.
Revenue rose to £847.8M from £760.1M this time last year, although the firm’s order book is slightly down at £3.7bn compared to £3.9bn in the same period last year.
Its Infrastructure division, covering highways, rail and nuclear markets, saw revenue increase to £694M from £613.2M. Meanwhile its Natural Resources division reported a rise in revenue to £177.7M from £175.7M. The group said discussions are ongoing regarding the Manchester Waste PFI contract but did not comment further.