Waste volumes have historically moved in line with gross domestic product (GDP), so as Europe's largest listed independent waste management company, Shanks was always going to find the going tough. And so it proved in the first half of this year, with trading profits down 16 per cent to £26.5m even with a currency uplift due to the strength of the euro against sterling. After taking exchange rate movements into account, trading profits fell by 24 per cent.
Most of the shortfall was in the Netherlands which is the group's primary source of revenue, accounting for around two-thirds of trading profits. Reflecting pricing pressure and an underlying 13 per cent decline in revenues, profits here fell 17 per cent to £18.3m. The 23 per cent slump in profits in the Belgium business mainly reflected challenging trading conditions in Shanks' solid waste management business.
Sensibly, management has battened down the hatches until Europe's economies start to grow again. After all, waste management and pressure to recycle more waste will only increase in the longer term. The balance sheet has been bolstered by a rights issue and the sale of the Avondale Landfill joint venture which helped reduce net debt by almost a third to £198m. The group also remains on track to deliver £10m of previously targeted annual cost savings.
Investec Securities is forecasting full-year adjusted pre-tax profits of £35m and EPS of 6.7p (2009: £43.9m/8.6p).
for a guide to the terms used in IC results tables
For more analysis of company results as they're released, go to www.investorschronicle.co.uk/results
| SHANKS(SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 86p | MARKET VALUE: | £341m | |
| TOUCH: | 85-86p | 12-MONTH HIGH: | 121p | LOW: 36p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 97p* | NET DEBT: | 90% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 346 | 22.9 | -2.6 | 1.7 |
| 2009 | 335 | 17.4 | 3.5 | 1.0 |
| % change | -3 | -24 | - | -41 |
Ex-div: 10 Dec Payment: 15 Jan *Includes intangible assets of £308m, or 78p a share | ||||
