Costain’s Share Price Rallied 9.39% on £670M NWG Contract Win

The Costain Group PLC (LON: COST) share price rallied 9.39% after announcing its appointment by Northumbrian Water Group (NWG) to lead its strategic infrastructure upgrade initiative. The framework agreement, potentially valued at up to £670m for Costain over 12 years, continues the Company's trend of significant achievements in the water sector.

Under the contract, Costain will collaborate with NWG and its partners to develop and implement solutions aligned with NWG's business plan for Asset Management Period 8 (AMP8). The agreement takes effect immediately and spans an initial seven years, with the possibility of a five-year extension.

Key activities under this contract will include designing, constructing, and commissioning new water and wastewater treatment facilities, along with renewals, modifications, refurbishments, and extensions of existing treatment works. 

Another crucial activity covered by the contract is conducting investigative and delivery programs based on asset type, geographical area, or specialism.

AMP8 marks a period of unprecedented investment in the water industry. In 2023, Costain expanded its Managed Service Provider contract with United Utilities into AMP8 and continued its consultancy role with Yorkshire Water. Additionally, Costain secured Ofwat funding for innovative projects in the sector.

Regarding trading performance, Costain reports a successful year in 2023, expecting to meet market projections for adjusted operating profit. 

The company's financial performance, bolstered by increased financial income, robust working capital management, and accumulated £25.0 million in positive working capital timings, resulted in a year-end net cash position of £164.4 million for 2023. The figure significantly surpasses the market's anticipated £128.6 million and the previous year's £123.8 million.

Alex Vaughan, Costain’s CEO, said: “Costain is a leading business partner to the water industry, ensuring that water companies achieve value for money as they meet the needs of their customers and the regulator during this crucial period for water investment. We are looking forward to supporting Northumbrian Water in this new working relationship, upgrading both its wastewater and water treatment infrastructure to improve people's lives and safeguard the environment. At Costain, we develop solutions by building collaborative and sustainable relationships with our customers, and we are excited to begin this vital work.”

Costain share price.

The Costain share price rallied 9.39% to trade at 68.7p from Tuesday’s closing price of 62.8p.