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Market warning from industry chief

A waste boss has warned that the solid waste market will not recover from its current depressed state for the foreseeable future.

Speaking exclusively to MRW, Shanks Group chief executive Peter Dilnot, said the solid waste market in the UK and northern Europe was currently “very challenged”, with arisings hit by lower output in the wider economy.

He said he did not believe there would be a recovery “for the foreseeable future”.

Dilnot was speaking a week after Shanks issued a shock profit warning that sent shares tumbling 15%. Brokers slashed guidance for the firm’s annual profits down from £34.5m to £29m.

The firm said market conditions in the UK and Dutch solid waste markets - which accounts for around 40% of Shanks’ profits and excludes most municipal contracts - had “deteriorated significantly”.

Dilnot said waste firms must plan to counter the market forces hitting profit margins. Despite his grim prediction, Dilnot said Shanks would increase its profitability in that market by increasing productivity and restructuring the business. “We are planning for lower volumes and a tough pricing regime and taking action to offset that”, he said.

Jacob Hayler, economist at the Environmental Services Association, told MRW while municipal waste should see continuing sustained demand, commercial waste had seen large falls in volume since 2008.

He added: “At the moment it is uncertain what will happen to future UK arisings once the economy finally recovers from its current general malaise.

“HM Treasury’s modelling of future landfill tax revenues suggest it thinks that volumes will bounce back strongly in the second half of the decade but I suspect many in the industry would be much more pessimistic.”

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