UTILITIES company Pennon Group yesterday reported a drop in profits at its recession-hit waste management unit, as warned earlier this month, and said it did not see a recovery in prices for recycled materials in the near future.
Pre-tax profit at waste management business Viridor fell over 30 per cent in the six months to the end of September to £28m, in line with a profit warning issued by the company two weeks ago.
A weak global economy has severely depressed average prices for waste paper and recovered metals used in recycling, and Viridor remained cautious about the prospect of recyclate prices recovering.
“The fall in recyclate prices has a fairly brutal impact on turnover,” Colin Drummond, chief executive of Viridor, said.
“We’ve been able very quickly to recover 50 per cent of the fall in recyclate prices through a combination of cost reduction, facilities rationalisation, headcount reduction, change in the terms of our supply with customers.”
The performance at Viridor was offset by a 10 per cent rise in pre-tax profit at Pennon’s South West Water business to £84m.
Shares in Pennon climbed over four per cent to 625p yesterday, recovering some of their losses after they dropped as much as 10 per cent following the profit warning.
City A.M. Reporter