A further downturn in the Dutch construction market weighed heavily on waste management business Shanks (SKS) last year. Operational issues at its hazardous waste division, combined with the weak euro, compounded tough trading conditions for the group. While trading during the second half picked up, it was not enough to prevent the group reporting a fairly dismal set of results - with cash profit down 16 per cent to £73m.
Minimal GDP growth for Belgium and the Netherlands, and a subsequent decline in the construction industry, resulted in trading profit for the group's solid waste (Benelux) division dropping by a third to £11.9m. This also led to the group incurring an £11.1m impairment charge for its solid waste (Netherlands) business. However, chief executive Peter Dilnot said during the final quarter of trading the division - which recycles waste from construction sites - began to benefit from the introduction of an incinerator tax.
Management has introduced a number of self-help measures to push the group back into growth. These included investing in new equipment for its hazardous waste business, such as doubling capacity for storage tanks used for contaminated water. However, since old equipment had to be shut down while refurbishment took place, this drove down trading profit by a fifth to £16.4m.
Broker Investec Securities expects adjusted EPS of 4.7p in 2016, down from 5p last year.
SHANKS (SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 107p | MARKET VALUE: | £427m | |
| TOUCH: | 107-108p | 12-MONTH HIGH: | 113p | LOW: 85p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 48p* | NET DEBT: | 82% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 717 | 21.2 | 5.5 | 3.25 |
| 2012 | 750 | 29.9 | 6.5 | 3.45 |
| 2013 | 615 | -10.1 | 0.4 | 3.45 |
| 2014 (restated) | 633 | 7.6 | -7.1 | 3.45 |
| 2015 | 599 | -20.5 | -4.3 | 3.45 |
| % change | -5 | - | - | - |
Ex-div: 2 Jul Payment: 31 Jul *Includes intangible assets of £174m, or 44p a share | ||||
