Costain cuts Dubai out in restructuring

UK construction company bows out of the region to focus on core disciplines

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By  Construction Week News Team Published  September 9, 2006

Costain has closed its Dubai office after posting losses of more than US $38 million (£20 million) for the first half of the year. It ends a 40-year association with the emirate and follows the closure of its international division and a group-wide restructuring exercise that will see the firm focus on core disciplines. The contractor also admitted to breaching its banking covenants but said the issue had been resolved with its lenders. Costain’s relationship with the construction industry in the Middle East dates back to the 1960s and it picked up the $10 million main contract for the construction of Dubai International Airport in 1971. Chairman David Jefferies, said: “The new management team, under the leadership of Andrew Wyllie, has taken robust action to deal with those activities within the group which are under-performing and to ensure the successful operating approach, already in place within the majority of our sectors, is adopted across the whole business.” He added: “While we have incurred significant write-downs in the first half of this year, the board remains committed to the resumption of dividend payments as soon as is financially sensible and will consider the position at the year-end in the light of the group’s performance and prevailing trading conditions.” Dubai was Costain’s regional support hub and the firm had hoped to pick up substantial reconstruction work in Iraq. But its operations in the country have been continually hampered by ongoing security issues. It has also encountered serious delays on its Bid Boland Gas Facility project in Iran which has been stalled for more than a year because of funding problems. An insider told Construction Week that the firm would continue to pursue international opportunities but only as part of its core operating segments.

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