Costain shares plummeted 13 per cent in the opening minutes of trading in London after the construction company encountered additional setbacks to HS2.
The Bishopsgate-headquartered firm revealed that its total revenue dropped 17.8 per cent to £525m during the first half of the year, with income from its rail infrastructure operations declining 23.3 per cent to £185m, as reported by City AM.
Costain attributed the decrease to “due to the development of a new integrated programme schedule for HS2, which is rephasing elements of our contracted activities in the short term into future years.
“The HS2 programme continues to be navigating a change in its programme delivery strategy.”
Costain stock declined 14.2 per cent to 140p on Wednesday.
The revenue downturn followed the government’s warning that HS2’s launch would be postponed beyond its initial 2033 deadline, though officials could not specify when the new high-speed London-Birmingham route might eventually commence operations.
Transport Secretary Heidi Alexander described a “litany of failures” as the cause of postponements and escalating expenses, informing the House of Commons: “It gives me no pleasure to deliver news like this.
“Billions of pounds of taxpayers’ money has been wasted by constant scope changes, ineffective contracts and bad management.”
Stronger medium-term infrastructure outlook
Despite the setbacks, Costain reported that the final three of its four tunnel boring machines in the Northolt Tunnel successfully finished their drives safely and on time, marking a crucial achievement for the HS2 project as it completed the twin-bore tunnel linking West Ruislip with Old Oak Common, a new station intended to connect HS2 with the Great Western Railway from Paddington.
The firm’s road infrastructure turnover fell by more than half to £83m throughout the period. Costain attributed this to a decline in National Highways schemes revenue as particular projects reached completion or neared their end, a drop which was partly balanced by expansion in contracts with Transport for London.
However, Costain expressed encouragement from spending pledges outlined in the government’s 10-year Infrastructure Strategy and Infrastructure Pipeline, stating it anticipated a “step change in performance” within the business by 2027.
“Whilst we remain mindful of the near term macro-economic and geopolitical environment and the potential consequences of government spend phasing decisions, the improvements in market outlook and the group’s positioning and resilience underpin our confidence in delivering on our expectations for further progress,” the company stated.
