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UPDATE 1-Shanks says weakness in Dutch solid waste unit to hit first half
July 21, 2014 / 7:40 AM / 3 years ago

UPDATE 1-Shanks says weakness in Dutch solid waste unit to hit first half

(Adds details, analyst downgrade, share movement)

July 21 (Reuters) - British waste manager Shanks Group Plc said first-half results would be hurt by a strengthening pound and further weakness at its solid waste business in Belgium, the Netherlands and Luxembourg.

Shares in the company fell as much as 5 percent in early trade on Monday, making the stock one of the top percentage losers on the London Stock Exchange.

Solid waste, particularly in the Netherlands, was under increased margin pressure due to a further reduction in the volume and prices of key recyclates, as well as aggressive market pricing, Shanks said.

The company, one of the largest solid waste managers in the Netherlands, has been struggling to overcome the effects of a long-running slump in the Dutch construction market.

Shanks said it expected full-year results broadly in line with expectations if the solid waste market did not weaken further in the three countries.

Investec analyst John Lawson downgraded Shanks’ stock to “hold” from “add”, blaming the potential hit from the strong pound and competitive pressures for solid waste managers in these countries, mainly from market leader Van Gansewinkel.

Lawson also lowered his full-year pretax profit estimate for Shanks by 10 percent to 27 million pounds ($46.1 million).

Chief Executive Peter Dilnot told Reuters in May that he expected profit for the current financial year to be flat, mainly due to weakness in Shanks’ solid waste business in Belgium and the Netherlands. ($1 = 0.5854 British pounds) (Reporting by Richa Naidu in Bangalore; Editing by Gopakumar Warrier)

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