Pennon Group yesterday warned that the slowdown in the world economy had hit its waste disposal arm Viridor, with trading “significantly below” last year’s highs.
The waste business – seen as the group’s growth engine less than a year ago – has suffered from tumbling prices for waste paper and recovered metals in recent months as wider economic woes take their toll.
It said: “Viridor is not immune to the difficult conditions in the world economy and trading has been significantly below the high level of last year’s first half, with recyclate prices remaining under pressure.”
On the positive side, the company highlighted its recent signing of a 25-year contract with Glasgow City Council to design, build and operate a £160 million recycling and renewable energy centre.
The facility, at the council’s own site in the south of the city, will be able to treat up to 200,000 tonnes of waste a year.
Viridor chief executive Colin Drummond said recently that the business is concentrating its investment north of the Border because of the Scottish Government’s zero waste plan to make councils, public bodies and businesses recycle all their rubbish. The firm has £500m earmarked for investment in Scotland in the next five years, accounting for a third of its spending plans.
Pennon said that a strong performance at its water and sewerage business had helped the company to perform in line with its own expectations.
South West Water – which supplies water to Cornwall, Devon and parts of Dorset and Somerset – has seen a “robust” start to the financial year, it said.
Shares in the company initially fell more than 2 per cent following the latest update but recovered to end the day down just 2.5p or 0.3 per cent 747p.