Bottom Line: Bad news dries up at Caird

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The Independent Online
LIFE has been hard for waste management companies in recent months, but Caird Group has sunk further into the mire than many others. However, the events of the past two days appear to be a turning point.

On Wednesday Caird finally rid itself of chief executive Peter Linacre, the former stockbroker who was a whizz at buying assets, but appeared not to be too sure of what to do with them once he had them. His replacement is an old hand at waste management from Cleanaway. Then yesterday Caird issued its full-year results.

In November it warned they would be bad. That was Caird's second profits warning in just over two years, and the shortfall did not disappoint.

Full-year pre-tax profits fell from pounds 6.87m to pounds 4.04m, earnings halved to 1.33p and there was no final dividend.

But, to the market's relief, the bad news seems to have dried up. Sure the Renfrew incinerator project is still on ice - it is three years behind schedule - but the group seems to be successfully securing planning permission and licences for its backlog of sites.

For example, it has 48 million cubic metres of landfill space, of which less than half is licensed.

The group has slowed its capital expenditure to a trickle, and this should help its sagging balance sheet.

With margins improving and some hands-on management, the good business that is lurking within Caird should be able to break out.

Profits will recover to about pounds 5m this year, and there will be a dividend.

The shares, which are just 23.5p compared with a high of more than 230p, are a bargain.