Shanks Group CEO Peter Dilnot is considering closing facilities and cutting jobs after reporting a sharp fall in profits.
The firm said its solid waste operations had been hit by the economic downturn and declining business waste arisings, as predicted last month. The UK firm, which also operates in Netherlands, Belgium and Canada, said trading profit for the six months to September fell 15% to £21.7m from £28.1m .
CEO Peter Dilnot, told MRW the results were in line with the firm’s revised expectations following a shock profit warning in October.
He acknowledged that Shanks’ solid waste businesses in the Benelux and UK, handling mostly commercial and construction waste and contributing around 30% of the Group’s profits, were “very challenged”. But he said the firm’s organics, UK municipal, and hazardous were performing “very well and in-line with expectations”.
Dilnot said he was taking “decisive action to restructure the business” taking “tough and difficult decisions”. The firm, he said, was looking at mothballing and closing some of its UK solid waste facilities and cutting jobs.
While the continuing pressure on gate fees and recyclate prices had levelled off, the business solid waste market would not recover in the short term, he added.
He said the fact the company had maintained the interim share dividend showed the board’s confidence for the future, and predicted uplift in the second half from cost reductions already made.
Shanks invested over £300m in infrastructure over the past four years, throughout the recession, Dilnot added, and would continue to do so in the future, continuing to generate incremental profit and tackling problems with the firm’s “legacy business”.
Key figures from the report:
|2012||2011||Change % - constant currency|
|Underlying free cash flow||£10.2m||£18.3m||-34%|
|Underlying profit before tax||£14.3m||£20.2m||-22%|
|Profit before tax (statutory basis)||£7.0m||£17.3m||-54%|
|Basic EPS (statutory basis)||1.6p||4.3p||-56%|
|Dividend per share||1.1p||1.1p||-|