Costain builds record £7bn order book as profit jumps a third
Costain builds record £7bn order book as profit jumps a third
Costain has laid down a strong base for its next phase of growth after piling up a record £7bn forward work position and lifting operating profit despite a sharp revenue drop in transport.
The firm posted revenue of £1.05bn for the year to 31 December 2025, down 16% from £1.25bn, as lower road and rail activity dragged back the top line.
But Costain managed to lift pre-tax profit nearly a third to £48m while net cash rose to £189m from £158m.
An improvement in cash flow gave Costain room to increase shareholder returns, with a £20m share buyback this year and a 75% rise in the full-year dividend to 4.2p.
Costain said the big driver behind the improved earnings quality was the strength of its long-term programme book.
Forward work jumped 30% to £7bn, including £1.1bn already secured for FY26, equal to about 90% of forecast revenue for the year.
| Division trading performance | |||||
|---|---|---|---|---|---|
| Division | Revenue | Change | Op profit | Change | Margin |
| Transportation | £605m | -28% | £25m | -17% | 4.1% |
| Natural Resources | £440m | +9% | £35m | +47% | 7.9% |
Across the divisions, Transportation remained the weak spot on revenue, with turnover down 28% to £605m as National Highways road jobs wound down and HS2 rail work shifted into later periods.
But divisional margin still improved to 4.1% from 3.5%, helped by the completion of lower-margin legacy road contracts.
Natural Resources helped to compensate. Revenue rose 0% to £440m while divisional operating profit jumped 47% to £35m, pushing margin up to 7.9% from 5.9%.
Stable water revenue through the AMP7 to AMP8 handover, plus growth in energy, defence and nuclear, gave the division a much stronger mix.
Chief executive Alex Vaughan said: “Strong cash generation has resulted in a strengthened balance sheet and supports increased shareholder returns, with confirmation that we will proceed with a £20m share buyback programme in FY 26 and implement our target dividend cover of 3x adjusted earnings.”
He added: “Our forward work position has grown by 30% to a record £7bn, almost seven times FY 25 revenue, giving good visibility of future work and, combined with our strong balance sheet, underpins our confidence in delivering revenue and operating profit growth in FY 26 and a step change in performance in FY 27 and beyond.”
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