Construction group Costain today showed the benefit of seeking out public sector work as it revealed a record order book, despite growth in the economy faltering.

Costain reported a 26 per cent increase in pre-tax profits to £10.1 million in the first half of the year to the end of June. Its forward order book increased by a quarter to £2 billion and the company said it was preferred bidder for a further £1 billion of potential work.

The company, which has hauled itself back from the brink after twice breaching its covenants two years ago, said it was well placed to continue delivering growth. A £60 million rights issue last year has enabled it to step up its bidding activity for an increased number of larger contracts, the construction group said.

"We believe that, despite the current economic environment, our targeted blue-chip customers, in particular those in the public sector and regulated industries, will continue with their investment programmes," David Allvey, chairman of Costain, said.

During the first six months of the year, Costain secured £900 million worth of new work, including a seven-year contract with Southern Water and work on Farringdon station in the City of London to prepare it for improvements to the Thameslink rail service.

Costain's civil engineering business accounts for over 80 per cent of the group's order book and concentrates on work in infrastructure, which includes roads, rail, highways and nuclear and environment and involves water, waste and marine activities.

The company is preferred bidder for a major waste scheme at Manchester. Its marine operation has been awarded a contract by Hutchison Ports UK to extend its container terminal at Felixstowe.

At Gatwick airport, it is advising BAA and it is trying to build a leading position in the growing nuclear decommissioning market, particularly at Sellafield.

Costain will pay an interim dividend of 0.25p for the first half.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts