26th Sep 2014 06:48
LONDON (Alliance News) - Waste management company Shanks Group PLC Friday said it now expects to miss its own full year expectations by about 15%, after trading at its solid waste Benelux business deteriorated even further in the first half of its financial year in the face of stiff competition.
In a trading update, the waste management company, which has a solid waste in Benelux, a hazardous waste unit, a UK municipal waste business and an organics unit, said its solid waster business continues to see weak volumes, particularly in the Netherlands construction and demolition sector.
"The competitive environment remains intense, with market participants seeking to gain volumes by aggressive pricing in order to offset pressure on gate fees, lower volumes and prices of recyclates. We are broadly maintaining inbound volumes, albeit with an adverse mix," the company said in a statement.
Shanks said the deteriorating market conditions of the business will now drag down the group's full year results.
"Overall, the board now anticipates that the group's full year results will be around 15% below management's previous expectations," said Chief Executive Peter Dilnot in a statement.
Shanks said it expects the Benelux Solid Waste markets to remain challenging in the near term, although it said its confident that "actions" its taking to address market pressures will support a stronger second half of the year.
"Longer term, the group remains well-placed to deliver profitable growth as a result of our investments in Hazardous Waste and in our UK PFI construction programmes, and to benefit from a market recovery in the Benelux," said Dilnot.
Shanks said its other three divisions, especially its Organics and UK Municipal businesses, had a good first half, with its Organics business underpinned by the successful renewal of a long-term contract with five municipalities in Flevoland and a ramp up in volumes in its London, Ontario facility.
The company said its construction projects at Barnsley, Doncaster and Rotherham and Wakefield remain on time and on budget, while it has also secured funding for its GBP145 million Derby project and construction work has now begun.
Shanks said it continues to manage its cash closely and in line with its expectations, while its net debt at the end of September is expected to be around GBP185 million.
The company said it will release its interim results for the six months to end of September of November 6.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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