WASTE management company Shanks said its pre-tax profits fell by a third yesterday but predicted stronger revenue streams from government spending in the sector.
The FTSE 250-listed group, which offers recycling, landfill and biological disposal services, saw its pre-tax earnings drop 33 per cent to £19.6m on flat sales of £684m. Shanks blamed the recession for shaving £25m from its surplus as volumes of construction waste fell and the value of recycled goods declined. Tax hikes on Belgian landfill sites, which it operates, and the exceptionally cold winter also dragged on performance.
But the group was upbeat on the year ahead.
Shanks has four private finance initiative contracts with local governments in the UK, and finance director Chris Surch told City A.M. it was in the running for six more.
Surch predicted further government stimulus in the form of investment in anaerobic digestion facilities as a way to bring the UK waste going to landfill sites below 55 per cent.
“There will obviously be pressure on public spending but we don’t see that impacting seriously on investment in the sector,” he said.
Shanks increased its dividend from 1.7p to 3p. Its shares closed down 2.5 per cent to 92p.