David Cranston said Northumbrian's future plans were still likely to involve the incineration of sludge, but he said this would prove less profitable than treating toxic waste.
Had the latter project been given the go-ahead it would have boosted Northumbrian's non-core activities. There, operating profits halved to pounds 2.8m in the year to 31 March 1992, despite a threefold increase in turnover.
The decline stemmed from losses at Amtec Europe, its pipeline maintenance business, which is now under new management. 'Essentially, we tried to put together two businesses. It looked straightforward but it turned out not to be so. We didn't make a very good job of it.'
Mr Cranston said the water and sewerage business, where operating profit rose by 36 per cent to pounds 66.9m, had shown a 'fairly sparkling' performance. Capital investment and acquisitions totalled pounds 160m, against pounds 134.7m the previous year.
Northumbrian, the smallest of the privatised water companies, raised pounds 100m last October in a 10-year Eurobond issue to fund future capital expenditure. Its pounds 6.1m cash pile has been transformed into net debt of pounds 102.8m after it bought leasing books to shelter tax obligations.
Pre-tax profits of pounds 69.4m were up by 13.6 per cent on a 23.9 per cent increase in turnover to pounds 252.1m. The dividend rises 10 per cent to 22.5p; yesterday the shares fell 7p to 563p.Reuse content