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Shanks looks for cover

Waste management business Shanks is still battling tough end markets and a high level of debt
November 6, 2015

Cost reduction and operational efficiencies were the focus for Shanks (SKS) during the first half of the year. The waste management group's efforts were reflected in a 120 basis point increase in the trading margin at its core commercial waste division. However, tough trading conditions in the Dutch and Belgian construction markets, as well as the troubled oil and gas sector, have continued to hold revenues down. Group cash profits fell 9 per cent to £35m.

IC TIP: Sell at 95p

Shanks' commercial waste division put in a mixed performance. Revenue in the Netherlands rose 6 per cent to €127m (£90.6m), aided by increased construction volumes, higher commercial prices and firmer recyclate pricing. However, revenue fell 5 per cent to €75m in Belgium due to reduced recovered fuel volumes at its Ghent facility and disruption to one of its key wood dust customers. Despite this, trading profit at the division grew by almost a third on a constant-currency basis.

Broker Investec Securities expects adjusted EPS of 4.5p for the March 2016 year-end, down from 5p in 2015.

SHANKS GROUP (SKS)

ORD PRICE:95pMARKET VALUE:£378m
TOUCH:95-96p12-MONTH HIGH:114pLOW: 88p
DIVIDEND YIELD:3.6%PE RATIO:NA
NET ASSET VALUE:45p*NET DEBT:103%

Half-year to 30 SeptTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2014305-8.6-2.51.1
20152962.60.31.1
% change-3-- -

Ex-div: 3 Dec

Payment: 8 Jan

*Includes intangible assets of £175m, or 44p a share