Posting its interim results for 2003-04, the company revealed a turnover for the first half of 2003-04 of 293 million compared to 275 million in the equivalent period of 2002-03. However, 15 million of this 18 million increase was because of a strengthening of the euro against the pound. Profit before tax fell from 19.1 million to 14 million. Total debt grew by 12 million to 309 million.
While profits in the Group's Belgian operations grew by 1.2 million to 8.2 million, the Group was pulled down by a 1.2 million decline in profits in the Netherlands.
As anticipated in previous financial statements, (see letsrecycle.com story), the Group has been pulled down significantly by its UK Waste Services division. Profit halved from 12.6 million in the first half of 2002-03 to 6.3 million in 2003-04. This reflected continuing difficulties in landfill, collection and recycling activities, the company said.
Although landfill prices were raised, landfill volumes were lower with reduced commercial and industrial inputs and diversion of special waste as a result of Landfill Directive regulations that came into force in July 2002. This has seen margins eroded.
Shanks Group chief executive Michael Averill told letsrecycle.com:
“We can't pretend that we are delighted with these results but we did manage to bring them in along the lines of our previous trading statement and, if anything, a little ahead of city expectations.”
Improvement
However, following a change of management earlier this year (see letsrecycle.com story), the company believes its recovery plan will see some degree of improvement in the second half of the year. The plan includes streamlining collection rounds in England and Scotland, focusing sales on more profitable opportunities and withdrawing from poorly performing contracts such as in Milton Keynes (see letsrecycle.com story).
Mr Averill said: “Looking ahead, we have highlighted a number of positive signposts for the second half and we are confident that we can deliver on those improvements.”
On a positive note, Shanks' East London Waste Authority contract is now beginning to pay off, contributing 13 million in the first half of 2003. The contract will use two mechanical biological treatment plants to process residual waste, which were given planning permission in August and September 2003.
The company is also in discussions with the council in Dumfries and Galloway, where Shanks is preferred bidder for a 25-year PFI waste contract, with regard to using similar MBT technology there.
Shanks' UK Chemical Services division, which handles hazardous waste, has seen a slight improvement its performance, managing to eliminate its trading loss of 900,000.
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