6th Nov 2014 10:04
LONDON (Alliance News) - Waste management company Shanks Group PLC Thursday said it is hoping for a stronger second half of the year, after profit in the first half dropped due to an increasingly difficult solid waste market in Benelux.
In a statement, the company said actions it is taking to address the market pressures in Benelux and to improve its operational efficiency "will support a stronger second half and a full year result in line with our revised expectations". It didn't say what its revised expectations are.
The comments came after its underlying pretax profit dropped to GBP11.2 million in the six months to end-September, from GBP18.2 million a year earlier, as revenue dropped to GBP304.8 million, from GBP323.8 million.
It swung to a pretax loss of GBP8.6 million, compared with a profit of GBP12.8 million a year earlier, as it booked a GBP11.1 million non-cash impairment on its Netherlands solid waste business.
Shanks had previously flagged the deterioration in its Benelux solid waste, and Thursday said the Dutch solid waste market fundamentals are showing some signs of improvement, although the timing of the benefit is uncertain.
"The end markets for construction and commercial waste remained weak, and over-capacity and aggressive pricing by competitors have continued to exert downward pressure on pricing and volumes. We have also experienced reduced recyclate volumes and prices, which has directly impacted profitability," it said of the situation in Benelux.
Revenue and trading profit also declined in the company's hazardous waste and organics businesses, but rose in its UK Municipal business.
Still, it maintained its interim dividend at 1.1 pence, saying it reflected its confidence in its medium-term growth prospects.
"We have a clear strategy to deliver profitable growth and attractive returns in each division. This is based on continued investment in new infrastructure that will generate increased high-quality earnings in our growth divisions, together with building competitive strength and capability in Solid Waste, so that we are well positioned to benefit as markets recover," it said.
Shanks shares were up 1.9% at 93.71 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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