Waste management company Renewi expects its year-end profit to come in slightly ahead of market expectations after its "good" fourth financial quarter which ended on 31 March. In a trading update issued on Tuesday, Renewi CEO Otto de Bont said that strong customer loyalty had kept churn low and helped to stabilise volumes. He noted that the company had been able to largely mitigate the impact of inflation in the quarter through its pricing strategy and cost control.
According to Renewi, the consensus expectations for its performance in the past 2022/23 financial year stand at €1.9bn for underlying revenue (FY2021/22: €1.87bn), at €254m for underlying earnings before interest, tax, depreciation and amortisation (underlying Ebitda, prior year: €263m) and at €127m for underlying Ebit (prior year: €134m).
In the Commercial Waste Division, which pools commercial, industrial and municipal waste management operations in the Benelux region, volumes in the fourth financial quarter had recovered slightly in the Netherlands., In Belgium the decline in volumes had been moderated. Cost increases were mitigated by strong price management combined with cost controls and stable recyclate prices, explained Renewi.
Good performance was reported for water treatment activities within the Mineralz & Water division, while gradual progress was made on obtaining government certification for its gravel, sand and filler products and securing future outlets for this material. The offtake of the remaining stock of thermally cleaned soil (TGG) is "progressing with several contracts signed or underway", according to the trading update. Within the Specialities division, the e-scrap recycling subsidiary Coolrec and glass recycler Maltha continued to perform well.
Renewi's UK Municipal business consists largely of public-private partnership waste contracts. The company anticipates that it will need to take additional onerous contract provisions for some of them as an exceptional charge in the recently ended financial year. These charges were expected to total around €20m, and had been driven largely by inflation-related increases in cost assumptions and lower volumes, Renewi said.
As previously announced, a €15m provision made in connection with an EU state aid investigation of landfill tax in Wallonia would be released after positive resolution of the case.
Looking ahead to the current 2023/24 year, Mr de Bont said that while price levels for secondary materials had normalised, the company also expected the impact of inflation to ease over the course of the calendar year. Renewi planned to build on its leading position in Belgium and the Netherlands, and "to grow in specific market segments, such as healthcare and construction and demolition”.
Renewi plans to present its full year earnings report on 25 May 2023.
