Shanks’ preliminary results have revealed that it suffered a £2 million fall in revenue as a result of falling prices for recycled materials.
In its core solid waste markets, which are based in Belgium and Netherlands, it saw this drop in value as a result in the fall of prices, while it also suffered from lower gate fees due to pressure from strong competition.
Despite reporting underlying profits before tax falling by 22% to £21.7 million at constant currency, Shanks is confident that its long-term outlook is positive in its operations in UK, Benelux, and Canada.
It said that the last 12 months had seen legislative developments that support its long-term growth prospects.
This included the introduction in January 2015 of a €13 per tonne tax on incineration in the Netherlands that is expected to be extended to exported waste from July 2015. This is intended to increase recycling rates, and Shanks believes this will enhance demand for its recycling services in the long term.
It also cited Zero Waste Scotland benefit of promoting waste diversion that helped to deliver increased tonnage to its Cumbernauld anaerobic digestion facility.
The company also said that its ‘waste-to-product’ strategy offers the “most capital-efficient solution to the effective recycling and management of waste”.
Shanks Group PLC group chief executive Peter Dilnot (pictured) said: “After a challenging first half of the financial year, we delivered our committed stronger second half performance. Our core Dutch solid waste markets are developing as predicted, with some encouraging evidence of improvement.
“We continue to invest in infrastructure that will deliver high-quality earnings growth and these projects are on track.
“In addition, we have a refined strategy and a new organisation structure to deliver profitable growth. The board’s expectations for the year ended March 2016 remain unchanged excluding the impact of a fluctuating euro exchange rate on our reported results.”