NTR profits up but will act cautiously on acquisitions

UTILITY COMPANY NTR has warned that the profitability of its waste and recycling unit is coming under rising pressure as the economy contracts in its core Irish market and in the US and Britain, writes Arthur Beesley, Senior Business Correspondent

Reporting a sharp rise in attributable profit to €23.2 million for the six months to September, the company declared plans to stand back temporarily from its ongoing round of acquisitions in the waste and recycling sector.

NTR has €369 million in cash on its balance sheet following its sale to the Government of the West-Link bridge concession and the disposal of its interest in wind energy firm Airtricity.

While finance director Michael Walsh said NTR might take advantage of the economic situation to make acquisitions, he said the firm would wait another three of four months to see "just how deep" the recession proved to be before making any move.

NTR spent a total of €20 million on the acquisition of US firms American Recycling Corporation and Global Recycling and British recycling firm Leicester Paper in the first half of its fiscal year. However, Mr Walsh said the business would now concentrate on "consolidation and integration".

First-time contributions from British subsidiary Verdant and US subsidiary Mid-America Recycling helped increase attributable profit by €21.7 million in the first half from €1.5 million in the same period last year, when excluding once-off items.

However, Mr Walsh said a drop in demand in NTR's Irish waste business, Greenstar, in August and September continued into October.

"From a profit point of view we'll be under pressure, but the balance sheet is very very strong."

The company will review its cost base in the early part of the new year in light of the weakening economy. Asked if there was any threat to jobs, he said: "No area of cost would be left unexamined."

Revenue rose 76 per cent in the first half to €281.6 million. Earnings per share came in at 10.2 cent and the firm declared an interim dividend of 2.28 cent per share.

Having realised €1.3 billion in cash proceeds from the West-Link and Airtricity transactions, NTR returned €252 million to shareholders and spent a total of €240 million merging its US ethanol unit with Green Plains Renewable Energy and on new investments in wind power and solar energy.

NTR has earmarked expenditure totalling an initial €250 million by 2010 in wind and solar units. "We will stay with that barring a calamity," Mr Walsh said.