Profits waste away at Leigh Interests

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SHARES in Leigh Interests, the waste management company, plunged 51p to 175p yesterday after it warned that profits in the first half would be 'significantly below' those achieved in the previous year.

The group blamed a drop in waste volumes in the South, which has now spread to other regions as the recession deepens, a delay in completing the commissioning of new facilities in Wolverhampton and a reduction in contaminated land reclamation contracts.

'The combination of these factors is holding back the profits which the group can earn in the first half of this year to a level significantly below those earned in the corresponding period last year,' Malcolm Wood, Leigh's chairman, told the annual meeting yesterday.

But he added that the Wolverhampton facility was expected to be profitable in the second half and two important contaminated land contracts were about to start. 'I am confident, therefore, that the second half of the year will produce results significantly in excess of the first half.'

The profits warning was the latest in a series of shocks from the sector, which had previously been one of the stars of the stock market as investors believed that the industry would be recession-resistant and hoped that a rising level of environmental awareness would bring bumper profits. That sent Leigh's shares climbing to a peak of 391.5p in 1988.

Last year, Leigh disappointed the market with a 5 per cent fall in pre-tax profits to pounds 14.1m, blaming low waste volumes in the South-east, but any analysts had been expecting a recovery to pounds 16.5m in the year to next March.

The warning also hit shares of Leigh's rival, Shanks & McEwan, which tumbled 25p to 175p.