Costain Group PLC on Tuesday reported it returned to profit in 2022 and increased its annual revenue on the back of higher volumes in complex programme delivery.

In 2022, the infrastructure construction firm reported a pretax profit of £32.8 million, swinging from a loss of £13.3 million the previous year.

Shares in Costain were up 7.6% to 47.95 pence each in London at midday on Tuesday.

Revenue totalled £1.42 billion, up 25% from £1.14 billion the year prior. Costain said this was driven by increased volumes in complex programme delivery and the impact of inflation, as well as increased revenue in its consultancy-led sectors, predominantly in Energy and Defence.

At the end of 2022, the company’s order book stood at £2.8 billion, down from £3.4 billion at the same time a year prior. This reflected the timing of major contract bids, its customers’ investment programmes, and a shorter lead time of consulting and digital work, Costain said.

Chief Executive Alex Vaughan said: ‘Costain has effectively negotiated the challenges of material availability and inflation, as well as delays to some contract awards, delivering a robust operational performance. We expect to increase margins as we enact further operational improvements in the business during 2023 and beyond, and as we continue to grow the scale of our consultancy services.’

Looking forward, Costain said it has already secured more than £1 billion in revenue, representing around 80% of its expected revenue of 2023.

In addition, it said it expects to deliver an adjusted operating margin run-rate of 3.5% during the course of 2024 and 4.5% during 2025, in line with its ambition to deliver margins in excess of 5%.

The company declared no dividend but added that it remains committed to returning to dividend payments ‘when appropriate.’

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