COSTAIN, the construction and engineering group, plans to scrap nearly half its operating divisions as part of a new strategy to focus on its stronger businesses.

Andrew Wyllie, who has been chief executive since September, said that he wanted the company to be the “best in everything we do” as he outlined the plan to City analysts.

The company will shed up to seven of its fifteen divisions to concentrate on areas including road building and construction contracts in the water industry.

Mr Wyllie said that the unit devoted to high-rise residential building was expected to be one of those cut. He said that the company would also concentrate its efforts on larger, blue-chip clients in the hope of winning more repeat business.

The group reported pre-tax profits of £25 million for the year to December 31 — a 138 per cent improvement on 2004 as new IFRS accounting rules switched some profits from 2004 into the 2005 financial year. Underlying profits, excluding the accounting change, rose 6.2 per cent to £20.7 million. The group’s order book rose 73 per cent to £1.9 billion, hitting record levels largely through repeat business.

Costain reiterated its intention to resume dividend payments at the end of this year. Charles McCole, finance director, said that the payments would initially be “minimal”.

Members of the final-salary pension scheme, closed to new members last year, are to have their benefits changed. A new system will assess their entitlement according to their average earnings over their career. Contributions by both workers and the company will be increased help to meet a £69 million pension deficit.

Costain’s shares closed up 2¾p at 53¼p.