21st May 2015 08:37
LONDON (Alliance News) - Shanks Group PLC Thursday reported lower adjusted profit and revenue for its last financial year as a stronger second half performance failed to make up for the weakness of its Benelux solid waste business and challenges in its Hazardous waste unit during the first half of the year.
The waste management company with a solid waste business, an hazardous waste business, an organics business and a UK municipal business, reported a pretax loss of GBP20.5 million for the year to end-March, compared with a profit of GBP7.6 million a year earlier, as revenue declined to GBP599.4 million from GBP633.4 million and impairment charges rose.
It booked exceptional and non-trading items of GBP42.2 million, up from GBP22.5 million a year earlier, including impairment of assets at some sites, onerous contract provisions, another goodwill impairment related to its solid waste business in the Netherlands, and further restructuring charges.
Excluding exceptional items, financing fair value measurements and amortisation of acquisition intangibles, its closely-watched underlying pretax profit fell to GBP21.7 million from GBP30.1 million, as revenue fell to GBP601.4 million from GBP633.4 million.
Still, Shanks maintained its final dividend at 2.35 pence a share, which it said showed its confidence in its medium-term prospects. Its full-year dividend was maintained at 3.45p.
The company said revenue would have risen 1% if exchange rates had remained constant over the year, but earnings before interest, tax, depreciation and amortisation would still have fallen 10% to GBP73.0 million.
It said its Benelux solid waste division experienced a particularly challenging year as its markets deteriorated in the first half, with revenue down 1% and trading profit down 35% at constant exchange rates for the year as a while.
Trading profit was down 11% in its hazardous waste business on broadly flat revenue due to a weaker sales mix and operational issues in the first half. Revenue was down 5% and trading profit down 8% in the organics business due to an expected drop in pricing on long-term contract renewals and increased bidding costs in North America. The UK Municipal division was the standout performer with revenue up 5% and trading profit up 9%.
Looking ahead, the company said its expectations for the current financial year remain unchanged excluding the impact of a fluctuating euro-sterling exchange rate. It expects its hazardous waste and commercial divisions to "make progress", while the early benefits of newly commissioned assets will be offset by contract changes related to diversion targets and the residual operational impact of the fire at the Frog Island mechanical biological treatment plant in East London in its UK municipal business.
"We will also see a period of increased investment in our Municipal and Hazardous Waste divisions as we progress value-creating opportunities," it said.
It said it was seeing signs that its main Dutch solid waste business were beginning to improve.
"We continue to invest in infrastructure that will deliver high-quality earnings growth and these projects are on track. In addition, we have a refined strategy and a new organisation structure to deliver profitable growth," Chief Executive Peter Dilnot said.
Shanks Group shares were down 0.9% at 107.00 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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