Costain has posted a rise in first-half profits as improved contract selectivity and strong performance in its natural resources arm offset a sharp revenue dip caused by HS2 schedule changes.

Revenue fell 18% to £525m, with road and rail volumes down as highways schemes completed and parts of the HS2 programme were rephased into later years.

Despite this margins climbed to 3.2% from 2.5% as reported pre-tax profit edged up 7% to £18m.

Chief executive Alex Vaughan said the results underlined “the improving quality of our contract portfolio” and confirmed the group was on track to hit its 4.5% margin run-rate in the full-year.

Natural resources proved the standout performer, with revenue up 7% to £209m and divisional operating profit nearly doubling to £16m.

The unit benefitted from new energy transition work, contract wins in defence and nuclear, and a positive close to the AMP7 water framework cycle. Margins in the division leapt to 7.7% from 4.3%.

The highways business, however, felt the impact of project completions, with road revenues halving to just £82m. This saw revenue at the transportation division fall by 29% to £316m and operating profit plunge to £7.3m (H1 24: £13.8m). Costain added it was seeing a rising workload at Heathrow, which lifted integrated transport revenues nearly 80% to £49m.

The forward order book has swelled to £5.6bn – more than four times last year’s turnover – as Costain secured new long-term programmes across water, nuclear and aviation.

Presently the order book contains no single stage lump sum contracts and was predominated by target cost contracts.

Costain said 90% of forecast revenue for FY25 is already secured.

Cash remains strong at £145m, with year-end levels expected around £170m despite the launch of a fresh £10m share buyback. Shareholders will also benefit from a 1.0p interim dividend, up 150% on last year.

Vaughan said government’s new infrastructure strategy and regulatory determinations in water, energy and aviation “provide clarity and confidence in significant growth opportunities” across Costain’s core markets.