Tough European construction conditions dragged pre-tax profit at waste management group Shanks (SKS) down 24 per cent year on year to £26.5m, after adjusting for £61.8m of exceptional items - largely redundancy costs and a writedown on Scottish recycling assets.
With much of the eurozone in recession, and new residential building permits in the Netherlands at their lowest level for over half a century, Shanks' solid waste volumes in the Benelux region slumped 15 per cent to £331m. Moreover, competition is driving down gate prices and a Chinese slowdown has hit prices for recyclable material - so Benelux trading profit slumped 38 per cent to £16.3m. The UK solid waste market was even tougher - revenue there fell 24 per cent to £59.8m, and last year's £2.3m profit was turned into a £3.2m loss. In response, management cut headcount by 310 in the period and aims to raise that to around 420 in the solid waste business overall - that should deliver annual savings of £20m by the end of March 2016. Still, the Dutch hazardous waste business was more stable - trading profit there dipped 10 per cent to £19.1m. The UK municipal waste business, meanwhile, grew revenues 4 per cent and profits jumped 80 per cent to £9.2m
Broker Investec Securities expects adjusted pre-tax profit of £28.1m for 2014, giving adjusted EPS of 5.2p (from £26.5m and 5p in 2013).
SHANKS (SKS) | ||||
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ORD PRICE: | 81.3p | MARKET VALUE: | £323m | |
TOUCH: | 81.3-81.8p | 12-MONTH HIGH: | 99p | LOW: 73p |
DIVIDEND YIELD: | 4.2% | PE RATIO: | na | |
NET ASSET VALUE: | 79p* | NET DEBT: | 88% |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 685 | 29.3 | 1.00 | 1.70 |
2010 | 684 | 19.6 | 4.80 | 3.00 |
2011 | 717 | 21.2 | 5.50 | 3.25 |
2012 | 750 | 29.9 | 6.50 | 3.45 |
2013 | 670 | -35.3 | -8.90 | 3.45 |
% change | -11 | - | - | - |
Ex-div: 3 Jul Payment: 2 Aug *Includes intangible assets of £252m, or 63p a share |