Price of cost savings to keep Augean growth at lower end

Specialist waste management business Augean said its profit performance in the first half was “broadly in line” with the prior year on Tuesday, confirming it expected to deliver full-year profit growth, although at the lower end of market expectations.

The AIM-traded company said it recently instigated a cost-reduction programme which was expected to generate annual savings of around £2m from August, although it carried a one-off cost of £0.7m which would be shown as an exceptional item in the full-year results.

Augean said air pollution control residue (APCR) volumes within its energy and construction division continued to grow in line with expectations in the six months to 30 June, while as expected, volumes of other materials were lower, leaving profits marginally down overall.

“Performance from radioactive waste services (RWS) has improved strongly, as anticipated, with prospects positively impacted by two significant contract awards with total revenue of £4m, at typical RWS margins, over the next two years,” Augean’s board said in its statement.

“The waste on the first of these began to move at the start of the second quarter.”

Trading within the original industry and infrastructure business was robust and in line with management expectations, the board said, although the performance of Colt - which is now part of the division - had been “disappointing”.

“This has been caused by losses on one major legacy contract within Colt which has set back overall performance.

“This contract is ongoing and negotiations are expected to complete by September, with an anticipated positive impact on [the division’s] performance in the second half.”

Integrated services was flat year-on-year with Total Waste Management (TWM) meeting expectations and the East Kent High Temperature Incinerator reaching breakeven by the end of the half.

Augean claimed North Sea Services continued its good performance from the second half of 2016, and was profitable in the first half of the year compared with a £0.3m loss in the first half of last year.

It confirmed its interim results for the six months to 30 June would be announced on 19 September.