Waste management group Shanks (SKS) saw underlying pre-tax profit slide 22 per cent at the half-year stage to £14.3m, as weak conditions in Europe and the UK led to lower volumes and prices for solid waste. That performance missed analysts' expectations, too, which had already been revised down following September's profit warning.
Indeed, the UK solid waste division delivered a painful £2.2m loss - down from last year's £2.4m profit - with an 18 per cent slide in sales to £167.1m. While, in the Benelux region, solid waste profits dropped by £4.5m to £9.4m. In response to that grim performance, chief executive Peter Dilnot announced plans to save £20m a year by 2015-16 - that will see around 200 jobs axed in Europe, with 70 jobs set to go in Scotland. Meanwhile, profits at the organics and hazardous waste divisions fell 3 per cent and 12 per cent, respectively. However, progress was made at the UK municipal waste business, where profits grew significantly.
Shanks has continued to invest in new sites, which reduced underlying free cash flow by 44 per cent to £10.2m, while the net debt pile rose £29.9m year on year. Broker Liberum forecasts full-year adjusted pre-tax profit of £30m, giving EPS of 5.7p (from 7.2p for 2012).
SHANKS (SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 83p | MARKET VALUE: | £329m | |
| TOUCH: | 82.8-83p | 12-MONTH HIGH: | 118p | LOW: 73p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 73% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 398 | 17.3 | 4.30 | 1.10 |
| 2012 | 340 | 7.00 | 1.60 | 1.10 |
| % change | -15 | -60 | -63 | - |
Ex-div: 5 Dec Payment: 11 Jan *Includes intangible assets of £259m, or 65p a share | ||||
