Recycling and waste management firm Viridor has suffered a 26.5 per cent fall in profit to £22.5 million with the fall in recycling prices the primary reason behind the drop.
However, overall Pennon Group recorded a 3.4 per cent profit increase due to good performance from South West Water for the half year 2012.
Pennon Group chairman Ken Harvey said: “We announced on 15 November that trading in Viridor has been significantly below the high level of last year’s first half with recyclate prices remaining under pressure reflecting world economic and market conditions.
“Viridor is responding to the near-term challenges and has recovered about half of the impact of the reduction in recyclate prices through the terms of customer supply contracts and cost reductions.
“We remain cautious about the future prospects for recyclate prices. We have, however, made further strong progress on our PPP and EfW pipeline this half year which will form the basis for future growth.”
The company noted that from 2007/2008 until the first half of 2011/12, growth in profits from recycling had more than offset the decline in annual profits. However, since February 2012, Viridor’s performance has been impacted by recyclate prices which have remained under pressure reflecting world economic conditions.
As a result, overall prices per tonne for the half year fell to £103 per tonne compared to £125 in the previous year. In the third quarter, it has seen “no overall improvement” in prices and is cautious on the prospects for recovery.