Shanks has no plans to leave the UK, the company’s chief executive told MRW after the sale of its UK commercial and industrial (C&I) solid waste business.
Peter Dilnot stressed that the move was not the first step towards a progressive reduction of Shanks’ activities in the country.
“This is not Shanks exiting the UK. Far from it. We are refocusing our business where we can win and we can do a great job for customers,” he said.
Shanks’ UK solid waste business contributed to some 30-35% of total revenues in 2013. Could the sale lead to Shanks losing its position as one of the top seven UK waste management companies by revenue?
“We are not driven by the status and size of the company,” Dilnot said, “We are creating a focused business, with a targeted market where we can deliver a great service for our customers and attractive return for our shareholders.
“It’s not about a top line size, it’s about profitability and growth going forward.”
Dilnot said Shanks remained a major player in the UK waste industry, especially in the mechanical biological treatment and in the municipal solid waste sectors.
Shanks was investing £200m in Private Finance Initiative (PFI) assets, he added, “We are reinforcing our position in the UK as a PFI municipal player where we are a clear leader.”
The exit from UK C&I activities followed significant challenges the business had encountered in recent years, he said.
In the financial year ending March 2013 operating profits in the segment were down 239% compared to 2012.
The fall was mainly due to macroeconomic factors such as a decline in volumes of waste arisings, increase price pressure, and falling recyclate prices, said Dilnot. These challenges affected not only Shanks but all UK waste mangers, Dilnot pointed out.
However, he also said that C&I operations benefitted from an economy of scale and that Biffa, being the market leader in the sector, would be able to profit from them more.