A sustainable product and profitability
Against a difficult economic background, it is encouraging that Shanks (L:SKS) saw a modest growth in revenues and pre-tax profits aided by its self-help programmes. Strong long-term growth drivers driven by regulation to reduce incineration and landfill should underpin margin expansion in the next few years. This focus, complemented by tight capital disciplines, suggests increased returns should be evident in both the existing business and new investments and reward shareholders in the long term.
Netherlands the star performer
As indicated in the company’s recent trading statement, the recovery in its Netherlands Commercial business has continued and produced a sharp turnaround in performance at the interim stage. Helped by a modest recovery in construction volumes, firmer pricing and self-help programmes were the key drivers behind the 78% increase in trading profits. As a market leader, this important division has the potential to see a further improvement in margins and returns as they remain below long-term averages.
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