The Investment Column: Shanks thrives on rubbish
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.IT MAY be a cliche, but Shanks & McEwan is proving that it can make a handy amount of brass out of handling muck. In the past year, the grubby business of running landfill sites and burning BSE-ridden cows helped push up underlying profits for the year to March by 13 per cent to pounds 25.4m.
There are two factors behind Shanks' success. First, the demand for landfill sites, combined with increasing restrictions on the creation of new ones, means that space is at a premium. Shanks has 125 million cubic metres of free space, two thirds of which already has planning permission.
Second, Shanks' Rechem incineration business is running at full tilt after winning a three-year contract to burn bonemeal made from slaughtered BSE cattle. Profits at the unit almost doubled to pounds 1.75m, and are set to rise further as Shanks pushes through efficiency improvements. The government's enthusiasm for incineration as a cleaner way of disposing of waste, combined with a reluctance to allow new incinerators to be built, means that demand should be healthy even once the contract ends.
Looking ahead, using the methane gas thrown off by landfill sites to generate electricity is a growing business - it generated "tens of millions" of pounds of revenues last year.
All this adds up to encouraging growth prospects, and upgraded profit forecasts mean the shares - up 12.5p to 197.5p yesterday - now trade on a forward multiple of about 19. Even though they've doubled in the past year, the shares are still good value.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments