Viridor trading update warns of impact on recyclate prices on profits

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The owner of Viridor has said that the price of recyclate continues to have an impact on its trading.

In an update ahead of half yearly results published on 29 November, Pennon Group said that as flagged in its management statement of 17 August that Viridor’s performance has been impacted by recyclate prices which have remained under pressure reflecting world economic conditions.

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It added: “Overall, average price per tonne for the half year fell to £103, 17.6 per cent lower than for H1 2011/12. However, prices were significantly lower than this by the end of the second quarter.

“Recycling revenues for H1 2012/13 are expected to be £18.8 million lower than the same period last year.”

Pennon said that Viridor has taken steps to reduce its cost base and has recovered about half of the reduction in recyclate prices but profits will still be down 30.5 per cent to £27.8 million compared to the same first half in 2011/12.

It added: “Analyst forecasts for the full year currently assume a recovery in recyclate prices in the second half of the year. However, we have not seen an improvement in prices to date in the third quarter and are therefore cautious on the prospects for recyclate prices.”

However, profits in South West Water remain strong, leading to an expected profit before tax for the half year of £111 million, which will be up 3 per cent on last year.