Construction woes pull down Shanks

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The Independent Online
SHANKS & McEWAN, the waste disposal group, yesterday reported a two-thirds collapse in taxable profits from pounds 27m to pounds 10.2m for the year to 27 March, writes Neil Thapar.

The result, in line with a profits warning three weeks ago, reflected a pounds 19m provision at the construction business, where problems in obtaining payment for roadwork projects saw a pounds 2.7m trading profit turn into a pounds 15m loss last year. It is expected to incur a pounds 3m loss this year.

The company's landfill waste business increased profits by 9 per cent to pounds 13.7m despite sluggish demand because of the UK recession. Earlier this year, it acquired four new sites from Hanson, the industrial conglomerate, in exchange for a 4.7 per cent stake.

The group's environmental services side - which provides treatment of chemical waste - slipped from a profit of pounds 9.5m to pounds 9.1m due to difficulties at Rechem, acquired for pounds 170m in 1991.

Although the business handled higher volumes, this was offset by losses overseas due to regulatory changes affecting the shipment of waste across borders.

Gordon Waddell, chairman, conceded that Rechem's performance had been 'below average' but said it had been expected.

Earnings fell from 9.9p to 4.1p. The total dividend is held at 5.7p.

The results were accompanied by a gloomy trading statement. 'There is no evidence of any significant upturn in the group's business. Until that occurs normal pre-tax profits of the waste division are unlikely to differ materially to those of the past year.' The shares fell 5p to 170p.