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Shanks' revenue and profit up in 'challenging market'

Waste management firm Shanks Group has reported a “robust” performance for the year.

The company reported revenue up 3% and underlying pretax profit up 8% in its final results for the year to 31 March 2012.

Group CEO Peter Dilnot told MRW he was “pleased with the results” which show a “robust performance in a market that remains challenging”.

The company said its business highlights for the years included:

  • Initial £100m strategic investment programme performing well, with overall annualised post tax returns of 12.2% for projects which are fully up and running.
  • Next phase £150m strategic investment programme on track.
  • Focus on UK delivered 6% revenue growth, with PFI/PPP contracts achieving 10% margin in the year (2011: 6%) and the £750m Barnsley, Doncaster and Rotherham municipal contract achieving financial close.
  • The organics business delivered 28% revenue growth and trading margins increased from 13% to 18%.
  • £11m cost savings to offset challenging market conditions in our solid waste businesses.
  • Overall recycling rate at 78% (2011: 77%).

Dilnot emphasised the importance of the company’s UK PFI projects, and said Shanks could benefit from the evolution of public-private partnerships.

He said: “The PFI market is evolving and we’re waiting to see how that shapes up. What we are seeing is a trend towards shorter term projects, less capital intensive ones, and from Shanks’ point of view we think that provides some good growth opportunities.”

Dinot said that Shanks’ Benelux solid waste business had been negatively impacted by macro-economic factors affecting construction, demolition and industry, and by the “incineration over-capacity” in the market.

He said: “What has happened is we’ve held onto volumes but prices have been challenged: to offset that we’ve taken £11m of costs out of the business, taking it to £50m over the last three years. And we will continue to look for further group synergies.”

The company announced the creation of a new organics business unit, whose MD Henk Kaskens, will now report directly to Dilnot and will sit on the group executive committee.

Dilnot said: “Organics is incredibly important and exciting. We believe it makes a whole heap of sense taking away food waste and turning it into green energy. It is a growth area for us.”

He said the coming year will not be an “easy landscape” for the industry because of its close links to the wider macro-economic economy. But, he added Shanks were becoming “increasingly targeted and focused, and managing our business in ways that are lean and productive”.

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