Renewi Makes Positive Start; Expects Lower Hit To Quarterly Earnings

(Alliance News) - Edinburgh-based Renewi PLC on Tuesday said trading in the first quarter of this ...

Alliance News 7 July, 2020 | 12:19PM
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(Alliance News) - Edinburgh-based Renewi PLC on Tuesday said trading in the first quarter of this financial year was ahead of its Covid-19 adjusted expectations.

The international waste-to-product business said the hit on earnings for the three months to June 30 was EUR12 million, against the EUR20 million that was originally anticipated.

This was due to "a strong cash performance with no net outflow during the lockdown," according to the company.

The company announced a signed agreement with Shell and Nordsol to convert out of date food waste into bio-LNG, a highly sustainable version of liquefied natural gas used as a fuel source that produces fewer carbon emission and pollutants.

The company said the agreement was an important first step in creating a new market for low carbon fuel in the Netherlands. Despite core volumes being down 6% to the prior year, Commercial Waste Netherlands' volumes improved steadily through the quarter.

Bulky waste and construction volumes continued to be resilient, offsetting reduced roller bin collections which improved from 30% down on the prior year in April to 15% down in June.

Commercial Waste Belgium volumes also showed consistent improvement over the course of the quarter, from 35% down compared to the prior year in April to 21% down in May and 15% down in June.

Mineralz, which cleans contaminated soil and recycling mineral residues and turns them into secondary raw materials, saw volumes fall sharply in April but recovered well in May and June. This led to the subsidiary doing better than expected with soil processing volumes increasing to 35% of capacity.

Recycling subsidiary Coolrec has reopened Belgian and French facilities that had to close due to a lack of inbound waste in April.

The company said it saved over EUR10 million, which would almost double their actual losses, through cost plans put in place throughout the quarter.

Renewi's core net debt was EUR413 million on June 30, a EUR44 million improvement from EUR457 million at March 31.

The company said: "Adjusting for the EUR50 million benefit of government measures to delay VAT and payroll taxes into the next quarter, this still represented an underlying cash neutral performance, reflecting strong control of working capital and capital expenditure.

"Notwithstanding the encouraging start to the year, the outlook for 2021 remains dependent on the nature and timing of the lifting of remaining lockdown restrictions and the speed of economic recovery.

"We remain alert to the potential for a decline in late-cycle activities such as construction. We are also developing plans to accelerate further cost reduction measures if volumes fail to recover to anticipated levels."

The stock was up 5.2% at 27.30 pence in London on Tuesday.

By Greg Roxburgh; gregroxburgh@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Renewi PLC 24.50 GBX 0.82 -

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