Costain to boost dividend, reiterates outlook
Shares in Costain Group Plc sparked on Monday, after the construction and engineering group outlined plans to ramp up dividend payouts as it reiterated full-year guidance.
Updating on full-year trading, the FTSE All-Share firm - which specialises in major infrastructure projects - said profits were on track to meet market expectations, with the adjusted operating margin set to exceed the run-rate target of 4.5%.
Second-half revenues, meanwhile, were broadly similar to the first half, Costain said, due to rephrasing on the HS2 schedule and road projects completions.
Consensus for the year to 31 December 2025 end is currently for adjusted operating profits of £46.4m on revenues of £1.13bn.
Alex Vaughan, chief executive, said it had been "another positive year" for the business, including securing new contracts in Costain's preferred markets. He also confirmed that shareholder returns would be increased after a new agreement for the company's defined benefit pension scheme was struck with trustees, including removing a dividend parity arrangement.
In response, Costain intends to implement dividend cover of 3.0x, which will nearly double payments in the current financial year. It also plans to return £20m to shareholders through a share buyback.
Vaughan said the payouts were "supported by the strength of our balance sheet, substantial forward work position and confidence in our end markets".
As at 0900 GMT, the stock was up 9% at 177p.
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