31st Mar 2015 08:31
LONDON (Alliance News) - Shanks Group PLC Tuesday said its trading performance remains broadly in line with its expectations, despite difficult core market conditions, although it will book around GBP20 million in one-off costs in the second half and will alter its divisional structure.
The waste management company said trading across the group in the financial year to the end of March has been broadly in line with its expectations, though its said its main markets, in particular solid waste, remain challenging. It has seen a recent stabilisation in those main markets, however, and does expect its underlying performance in the second half to improve.
It has a solid waste business, an hazardous waste business, an organics business and a UK municipal business.
Market pricing remains tight, with pockets of intense competition in the solid waste market, and recyclate price have continued to fall. Shanks also said it has seen lower off-take demand for its solid recovered fuel in Belgium, hitting the profitability of its outlets in the country.
It has been boosted, however, by the implementation of a EUR13 per tonne incinerator tax in the Netherlands in January, price increases from which have been so far successfully passed on to customers.
Shanks added that it expects to book a one-off charge of GBP20 million for the second half of the year resulting from the decline in government bond yields, a GBP5 million impairment related to its Gent site in Belgium due to the challenges in that market, a GBP3 million charge related to contract provisions in the UK and Belgium and a GBP2 million historic revenue recognition adjustment related to life cycle accounting in its UK Municipal business.
In addition, Shanks said it is to shift to a new divisional structure, with its Organics division to be integrated into its Commercial and Municipal businesses. This will leave the company with three divisions - Commercial, Municipal and Hazardous - with the latter unaffected by the changes.
Shares in Shanks were down 2% to 105.65 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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