Waste network unit proves drag on profits at Augean

The Wetherby-based firm said the sale will allow it to focus on growth areas such as Low Activity Low Level Waste (LLW) from the UK’s nuclear estate and for Naturally Occurring Radioactive Material (NORM) from offshore oil and gas production.

New chief executive Stewart Davies said the group has already had expressions of interest from potential buyers for the waste network division.

“There is a serious possibility of finding a buyer. That would be the best outcome for the division’s employees,” he said.

The division employs 40 people in Wetherby, Cannock, Hinckley, Worcester and Rochdale.

Dr Davies said the group has taken some “strong measures” to improve the waste network division’s performance, but it was “time to draw a line”.

“The key issue is around the commodity nature of the business,” he said. “We’re bidding against other suppliers and there is very little opportunity to move margins.”

He said that once the division is sold off, Augean has some strong positions in a number of growth sectors.

He was speaking yesterday as the group announced half year results for the six months to June 30.

Revenues, including landfill tax, increased by 17 per cent to £23.4m and adjusted pre-tax profits rose by 18 per cent to £1m.

Augean reported strong growth from Augean North Sea Services, increasing revenues from land resources, driven by low activity radioactive waste disposal and an improved performance from oil and gas services.

The group has continued to invest in new waste treatment and disposal facilities.

Augean said it intends to dispose of the waste network division “as soon as practical”.

If a buyer can’t be found for the whole division, Augean will consider selling parts of it, or closing it if necessary.

Analyst Jo Reedman at N+1 Singer said: “Waste network missed expectations, reflecting down-time at the East Kent incinerator and continued losses in waste transfer. This has driven a 25 per cent cut to our 2013 pre-tax profits forecast to £3.2m, although the announced sale (or closure) of waste transfer means our 2014 forecast reduces by just six per cent.

“Following the appointment of Dr Stewart Davies as CEO, a strategic review of the group has begun to help formulate the group’s next steps.”