Shares in construction company Costain (COST) failed to hold on to early gains on Friday after the company had rushed out a statement before Thursday’s close in response to media reports that it had been dropped from a £1.3bn highways project.
Costain’s shares closed 13 per cent lower on Thursday after the building press reported that it would no longer be working on the A66 North Trans-Pennine route – the latest in a series of issues the company has faced in its highways arm. Costain confirmed the news, but said it was one of four contractors working on the scheme, so the project was accounted for in its preferred bidder book, rather than its order book – the value of which “is broadly unchanged” from the £2.8bn disclosed when it published its 2022 results in February.
Costain shares rallied by 6 per cent in early trading but later gave back most of these gains and were trading 1 per cent higher by mid-morning. Broker Peel Hunt maintained its ‘add’ rating on Costain’s shares, but described signs of market share erosion in highways (which make up around 30 per cent of its order book) as “concerning”. MF
Croda shares tumble on profit warning
Speciality chemicals group Croda (CRDA) issued a profit downgrade this morning as a persistent pattern of customer destocking hit multiple divisions. In consumer care, sales volumes were down by a “double-digit percentage” year-on-year for the five months to the end of May. Price increases and a favourable exchange rate have gone some way to offsetting this, with revenue remaining flat in this part of the business.
Croda’s crop protection division is now said to be experiencing “rapid customer destocking” – a trend which was not expected to materialise until later this year. Operating profit margins in the group’s life sciences business are also being hindered by lower sales for Covid-19 applications in the pharmaceutical industry. Group profit before tax for the full financial year is now expected to be between £370mn and £400mn. It was £780mn in 2022. Shares in Croda fell over 18 per cent in early trading before rebounding to 5,200p, a 14-per-cent drop on Thursday’s closing price. JJ
