Q1 Trading in line with expectations
14 July 2022
Group revenue and EBIT for the first quarter were ahead of the prior year and in line with our expectations. Recyclate prices have remained resilient; although ferrous metal prices have reduced from their peak over the past few months, prices remain well above historic averages. We also continue to maintain tight cost control and to actively manage the impact of inflationary cost pressures.
The acquisition of Paro has received approval from the competition authority and works council in the Netherlands and is expected to complete in August.
Good progress continues to be made with our three value drivers – our innovation pipeline, the recovery of earnings at Mineralz & Water and the Renewi 2.0 programme – which will deliver significant additional revenues and margin over the next three years and beyond. Installation of the first part of the Vlarema 8 project in Ghent has started and is on track to begin commissioning later this year.
Our cash performance in the first quarter was in line with our expectations, with core net debt as at 30 June 2022 increasing by €18m to €321m and leverage remaining below 1.5x net debt to EBITDA.
Legislative and regulatory changes continue to support the transition to increased recycling. For example, in June 2022 the EU Parliament approved the reform of the EU Emissions Trading Scheme (ETS) with, among others, the inclusion of waste incineration. Waste incinerators will have to buy emission credits for each tonne of CO2 they emit when processing household, company and industrial waste. This additional cost of incineration will be a catalyst for the recycling sector, as the inclusion of waste incineration in the EU ETS will incentivise the extraction of as much recyclable material as possible before incineration takes place, similar to the Vlarema 8 legislation in Flanders.
Our expectations for the financial year ending 31 March 2023 remain unchanged.