Iraq violence hits Costain contracts

CONSTRUCTION group Costain has been forced to put its ambitions in Iraq on hold because of the violence still blighting the country.

It had hoped to clinch lucrative reconstruction deals through joint ventures with its Kuwaiti shareholder Kharafi and a tie-up with US engineering firm Kellogg Brown & Root.

However, Costain admitted today: 'In the short-term security issues have prevented the award of any significant contracts.'

Chief executive Stuart Doughty said that until a proper administration was in place to handle contract awards, progress would remain 'slow, slow, slow'.

He insisted Costain was committed to Iraq, saying: 'Initial reparations never dash off at a great pace, it is more a question of one or two technicians on the ground helping the locals preserve the infrastructure that's there.'

Costain, which almost went bust in the mid-1990s, also unveiled a 30% improvement in first half pre-tax profits to £6.1m on turnover 17% higher at £296m.

The order book at the interim stage was 17% up on last year at £820m.

Chairman David Jeffries said Costain's recovery phase is complete, adding: 'We are confident of a good result for the full year.'

The company, which has not paid a dividend since 1994, is looking at a capital rejig that would enable it to resume payouts.