In a pre-close trading update for the six months ending 30 September 2014, released this morning, Shanks Group plc has said that “full year results will be around 15% below management’s previous expectations” by around 15 percent, while net debt at the end of the period is expected to be around £185m.
In the statement, Peter Dilnot, Group Chief Executive (pictured), said: “The underlying performance of our three growth divisions remains robust but market conditions in our Benelux Solid Waste business have deteriorated further over the summer and will impact our performance. We remain confident that the decisive action we are taking will enable the Group to deliver a stronger second half. Overall, the Board now anticipates that the Group’s full year results will be around 15% below management’s previous expectations. Longer term, the Group remains well-placed to deliver profitable growth as a result of our investments in Hazardous Waste and in our UK PFI construction programmes, and to benefit from a market recovery in the Benelux. ”
The statement went on to explain that the Group’s Solid Waste Benelux division had faced “market conditions which have deteriorated further, with weak volumes in particular in the Netherlands construction and demolition sector”. It added that “the competitive environment remains intense, with market participants seeking to gain volumes by aggressive pricing in order to offset pressure on gate fees, lower volumes and prices of recycles”. It does say that it is continuing its long-term programmes of procurement and continuous improvement.
Of the Group’s further three divisions, the statement said: “Hazardous Waste continues to invest in increased processing and storage capacity to drive sustainable growth in its ATM treatment facility”. It highlighted that it had “broken ground” on the Theemsweg site in Rotterdam, but that “one-off operational challenges… will have some impact on first half performance and will likely result in a broadly flat year on year performance for Hazardous Waste”.
As regards to its Organics division, Shanks said it had been a “good first half year” thanks to the renewal of a long-term contract with five municipalities in Flevoland. “We are going to expand capacity at our Cumbernauld AD facility in Scotland… we are also ramping up volumes in our London… and our bidding activities on two growth opportunities in Canada are proceeding well” the statement said.
And finally, UK Municipal is reported to have “performed well”. Shanks references the construction projects at Barnsley, Doncaster and Rotherham and at Wakefield, which “remain on time and on budget”, and it says it was “delighted to secure funding for the £145m Derby project, where construction work has now commenced”.