Hungry Straight on the path to expansion

RECYCLING group Straight is on the look-out for acquisitions after delivering strong 2010 results despite what it described as “dismal economic conditions”.

The Leeds-based group is bullish about its prospects in 2011, even though it sees no sign of an upturn in the near future.

Chief executive Jonathan Straight said: “I’m not sure the tough market conditions are ever going to get better. It’s down to us to maximise our opportunities.”

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Last year the group made two acquisitions which have changed the business model, meaning that Straight is no longer reliant on outsourced manufacture.

In March it bought the UK arm of Helesi for £1.65m, giving it a proprietary position in the wheeled bin market.

This was followed in August by the £2.9m acquisition of Powell Plastics, a key supplier of injection moulded products to the group. The Powell factory, in Hull, has since been developed to include a blow moulding capability.

By the end of this month almost two thirds of products will be produced in Straight’s own factory, transforming the shape of the business.

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Following these acquisitions, Straight is exploring a number of other opportunities.

Mr Straight refused to be drawn on price or targets, but said any purchases will be in environmental products and services.

The company, which makes and supplies products ranging from wheelie bins to water butts, saw revenues rise eight per cent to £30.7m and underlying operating profits rose 25 per cent to £1.9m.

The shares closed up 6.6 per cent last night, a rise of 6.5p to 104.5p.

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The group’s pre-tax profits fell from £1.56m to £1.47m, but this was down to corporate development costs of £308,000 to cover legal and adviser fees connected with the acquisitions.

Mr Straight said that some of its markets are doing “incredibly well” despite the tough environment, particularly garden products, such as compost bins and water butts.

He described the municipal market as “okay”, saying the group has seen a little more indecision.

“Every year we reduce our dependence on the municipal market,” said Mr Straight. “71 per cent of the business is now UK municipal – it was all of the business. Our goal is to reduce it to 50 to 60 per cent of the business.”

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He said that the public sector service cuts had not affected trading.

“Bins are off the radar, we don’t see councils stopping buying bins,” he said. “As more councils work together they might come to us for economies of scale. Councils are not the most efficient of people. There are savings that can be achieved.”

Under UK legislation, 40 per cent of rubbish in England is now being recycled and the next goal is to get to 50 per cent by the end of 2013.

In Scotland and Wales the targets are far more ambitious at 70 per cent.

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The group said it has identified considerable cost savings in the group’s manufacturing sites and will implement them over the coming year.

Mr Straight said this might lead to a reduction in the temporary workforce, but the impact on the permanent workforce of around 100 people will be “negligible”.

The cost savings will include changing the layout of its factories and altering shift patterns.

It will also close external storage sites in Peterlee in the North East and an old Helesi site near Rotherham.

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It said these cost savings will offset any impact from difficult trading conditions, allowing it to meet market expectations.

“2010 has been a great year,” said Mr Straight. “We’ve achieved these results against a backdrop of dismal economic conditions. We have to keep rising to the challenges and the challenges are not getting any easier.”

Leader in recycling products

Straight is the UK’s leading supplier of specialist kerbside recycling containers.

It also supplies a broad range of waste and recycling container solutions.

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Founded in 1993 by Jonathan Straight, the business has supplied more than 25 million kerbside boxes, baskets and caddies to local authorities across the UK, securing its position as the industry leader.

The business has two divisions. The core Trade Business supplies products to local authorities, utilities, the waste industry, retailers and other businesses and the Retail Business supplies a range of environmentally friendly consumer products.

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