15th May 2014 10:53
LONDON (Alliance News) - Waste management company Shanks Group PLC Thursday said it swung to a pretax profit in its last financial year, buoyed by higher revenue and a gain on the UK solid waste business it sold last October, but it said it expects its markets to remain challenging in the year ahead.
The company, which still has a solid waste in Benelux, a hazardous waste unit, a UK municipal waste business and an organics unit, reported a pretax profit of GBP7.7 million for the 12 months to March 31, compared with a loss of GBP10.1 million a year earlier. Its revenue rose to GBP636.4 million, from GBP614.6 million, while its net loss narrowed to GBP38.2 million, from a GBP35.3 million loss.
Excluding exceptional items like impairment charges and restructuring costs, pretax profit was flat at GBP30.2 million.
In its statement, the company said its expectations for the current year are unchanged. It expects its hazardous waste and UK municipal divisions to grow, while further costs cutting in its Benelux solid waste unit will offset the challenges it is facing in its markets. Its organics unit, meanwhile, is expected to be hit by price pressure an the cost of bidding for more contracts in Canada.
Its Benelux solid waste business posted its first profit growth for five years in its last financial year thanks to its cost cutting, with trading profit up 16% to GBP19.7 million despite a 5% decline in revenue to GBP324 million.
It said its hazardous waste business had also exceeded expectations by offsetting the end of a highly profitable contract in the previous year. Trading profit was flat at GBP19.9 million on revenue growth of 3%. It said trading profit was up by a double-digit amount excluding the big fiscal 2013 contract.
As it had previously flagged, Shanks' organics division had a challenging year due to over-capacity hitting its anaerobic digestion facilities in Benelux and due to operational challenges in Canada.
It said it will invest up to EUR1 million in bid costs in Canada in the current financial year.
Its UK municipal unit posted 19% revenue growth to GBP137 million, driven by the first full year of a contract in Wakefield, West Yorkshire. Reported divisional profit declined slightly to GBP9.2 million, although underlying divisional profit improved significantly excluding the success fee income it booked last year, it said.
Shanks kept its fiscal 2014 dividend flat at 3.45 pence.
Shanks Group shares were up 0.7% at 101.185 pence Thursday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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