The group recently sold its 50 per cent share of Avondale Environmental to Landmedia. It has spoken of the importance of focusing its efforts on its more significant projects and PFI deals in particular, such as the £725m 25-year PFI deal in Cumbria due to close shortly.
Shanks Group chief executive Tom Drury said: In the context of the unprecedented and extremely challenging market conditions that have affected the entire waste industry, we have responded swiftly by reducing our cost base going forward by £10m and right-sizing the business for the current environment. We have prioritised cash generation and financial strength with actions taken to realise the value from non-core activities and investments, as demonstrated by last Fridays announcement on the sale of our interest in Avondale.
Profits from its solid waste business fell by £0.2m and since November 2008 it reports that trading has been difficult because of the fall in the value of recycled materials. It has also suffered from the downturn in the construction industry and the plummeting price of recovered metals.
Although PFI profits also fell, the report stated that with many authorities about to start their procurement processes we are actively pursuing this limited window of opportunity as the next two years will see a large number of deals being closed.
Drury stayed positive about the UK waste management climate for the rest of this year, highlighting the Governments need for new waste management infrastructure.
He said: In the short term trading in Belgium and the UK is expected to be satisfactory but challenging.
The cash generation and the further planned disposals of non-core activities should enable Shanks to take full advantage of attractive investment opportunities in our business. We will continue to develop our three key principal growth opportunities of recycling, organic processing and UK PFI.
Shanks Group achieved a 19 per cent trading profit of £10.5m.