Waste management has been a precarious area during the recession as infrastructure projects and funding have been the first to be either delayed or dropped altogether as local councils and central government look to save money. Shanks (SKS) was hit harder than most, but there were signs in these half-year results that the company's self help programme might at last allow it to stand still safely, if not to boldly advance - underlying profit before tax edged up by three per cent to £18.3m.
Shanks' markets still look weak, particularly in Belgium, which meant that cash flow management had to play a prominent role in maintaining its performance. For example, free cash flow more than doubled to £23.1m as working capital spending was cut back, though better timing on private finance initiative (PFI) programmes also contributed. Combined with cost savings this helped to increase profits in divisions where sales were either weak or in decline. For example, the solid waste Benelux division saw sales fall by 7 per cent in constant currencies to £165m, but, in spite of this, operating profits actually increased by the same percentage to £10.7m. Hazardous waste, which is driven mainly by regulatory requirements, also posted an above average performance - underlying sales and profits here grew by 5 per cent to £75.2m and £11.1m, respectively.
Broker Investec forecasts full-year underlying pre-tax profits of £31m and EPS of 5.8p, up from £30m and 5.6p, respectively, last year.
SHANKS (SKS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 111p | MARKET VALUE: | £440m | |
| TOUCH: | 110-111p | 12-MONTH HIGH: | 112p | LOW: 72.5p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | na | |
| NET ASSET VALUE: | 73p* | NET DEBT: | 104% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 309 | 11.1 | 2.50 | 1.10 |
| 2013 | 325 | 12.8 | 2.40 | 1.10 |
| % change | +5 | +15 | -4 | - |
Ex-div: 4 Dec Payment: 10 Jan *Includes intangible assets of £232m, or 58p a share | ||||
