Costain taps into £350m contracts

ENGINEER and construction group Costain took a huge step forward in its recovery drive today, landing two contracts worth a combined £350m over five years.

The deals with Thames Water and Yorkshire Water are the first of many it hopes to win as the water industry prepares to splash out £22bn in the latest round of infrastructure investment.

The bulk of Costain's work with Thames and Yorkshire will be civil engineering on waste-water treatment projects. Both deals could be extended to 10 years.

Chief executive Stuart Doughty said the contracts were an 'excellent achievement' for the business, which almost collapsed under crippling debts three years ago.

A five-year plan was put in place under Doughty in 2001 and Costain has since shifted its focus away from fixed-cost deals and on to partnership agreements in the transport, health and water sectors.

Half-year results today showed that pre-tax profits rose 33% to £8.1m in the six months to 30 June on turnover of £340m, 15% up on the same period a year ago.

The forward order book stands at £1bn and Costain's new venture with China Harbour, one of China's largest construction groups, has already bid on five contracts.

Doughty said: 'We have had a very good first six months and are pleased with the continuing progress of the group.'

He reiterated that Costain hopes next year to pay its first dividend in 14 years.