Shares in Costain jump as HS2 construction moves forward
UK travel restrictions remain tight due to the Covid-19 lockdown, but not everything has ground to a halt. The City was on Wednesday digesting news that the Government is pressing further ahead with the mega HS2 project, which could provide a well-needed boost to construction businesses.
Europe’s largest infrastructure scheme recently got the green-light, and the Government today issued a “notice to proceed”, marking the formal approval for construction to start.
Contractor Costain welcomed the update. The company, led by Alex Vaughan, said a joint venture of which it is part has a £3.3 billion contract on the rail project, which includes creating tunnels in the approach to the London terminus at Euston station.
Given construction start dates are subject to health and safety guidelines on social distancing during the lockdown, Costain doesn’t expect the contract to make a significant contribution to its profitability until 2021.
However, Costain also said it has won a £210 million contract by Highways England to upgrade an existing section of the A30 north of Truro, Cornwall.
Shares in Costain leapt 19p, or more than 34%, to 74p.
A joint venture rival of which Balfour Beatty is part will also benefit from the HS2 update. However, unlike Costain, it didn’t put a formal statement out on the London Stock Exchange.
Preparatory works Balfour Beatty is working on are due to start imminently, though the main construction won’t start until next year. Shares in Balfour Beatty were 14.6p lower at 234.14p.
Today the FTSE 100 was 106.5 points lower at 5684.1, extending losses from Tuesday, while the FTSE 250 was down 582.24 points at 15500,33.
Meanwhile, pay cuts were a common theme today. PPHE Hotel Group outlined a number of ways it plans to reduce costs. That includes chief executive Boris Ivesha taking a temporary 100% salary cut. His basic pay last year was £426,542.
The FTSE 250 company also said total revenue in March reduced by 60.2% .
Shares in PPHE lost 70p to 1170p.
Over on the junior market, OnTheMarket, the online property firm set up by estate agents to challenge Rightmove and Zoopla, said there would be a 20% salary reduction for three months for bosses and most employees who continue to work remotely.
Shares in the AIM-listed company, which also suspended financial guidance for the year to January 2021, dropped 2.4p to 30.1p.
SMALL CAP SPOTLIGHT
Fashion brand Quiz today said it is has reopened its online business, sending the shares up nearly 14%, or 0.76p, to 6.21p.
The AIM-listed retailer temporarily closed stores, concessions and the online arm last month as the coronavirus crisis intensified. It recently warned that March revenues were set to be materially below the board’s expectations.
Quiz today said the reopened website will offer standard delivery services only. The distribution centre will operate in strict accordance with all government and health authority guidance.