Renewi plc (LSE: RWI), the leading European waste-to-product business, announces its results for the six months ended 30 September 2022.

Financial Highlights

• Underlying EBIT¹ increased 16% to €75.2m (2021: €64.7m), on revenue up 4% to €952m (2021: €916m)
• EBIT margin increased to 7.9% (2021: 7.1%) supported by good margins in the Commercial and Specialities divisions
• Underlying EBITDA¹ increased to €131.9m (2021: €126.6m)
• Statutory profit of €53.4m (2021: €36.5m) as a result of increased EBIT and a net exceptional profit* of €10m
• Core net debt^# increased to €388m (March 2022: €303m), reflecting the initial debt impact of €66m for the Paro acquisition and €16m of innovation capital investments. Net debt to EBITDA of 1.7x (March 2022: 1.4x) in line with expectations
• Main drivers of first half result included strong operational performance, balancing volume pressure with cost control, and margin management by passing inflation through to customers. Higher recyclate prices in Q1 and certain favourable one-off items supported the performance

Strategic Highlights

• Commercial Netherlands completed the acquisition of the Paro C&D business in Amsterdam in August. Site rationalisation and integration are now underway
• Renewi’s first advanced sorting line in Ghent has been built and is expected to be commissioned in H2 FY23, to allow our customers to be compliant with Vlarema 8 legislation which bans recyclable materials from being incinerated
• Good progress on committed €100m+ circular innovation investments with €45m deployed to date
• Both regulation and societal pressure continue to increase demand for recycled materials and to divert more waste from landfill and incineration to recycling
• Recycling rate increased to 68.4% (March 2022: 67.2%)
• Renewi 2.0 programme and Mineralz & Water recovery plan remain on track

Outlook

• We are mindful of the current challenging macroeconomic outlook with continuing inflationary cost pressures, the movement of recyclate prices to normalised levels and ongoing pressure on volumes in the near-term. Accordingly, management’s expectations for the full year are unchanged despite a stronger than anticipated first half performance
• In the medium-term we are committed to protecting our margins, offsetting inflation with price, countering volume pressure with strong cost control and benefitting from the Group’s proven resilience. We remain on track to deliver the remaining €40m+ from the identified value drivers
• In the longer-term we remain confident that, with regulation driving increasing demand for recycled materials, Renewi is well positioned for growth in its markets and to serve customers profitably as the circular economy develops and the market for low carbon secondary materials evolves

¹The definition and rationale for the use of non-IFRS measures are included in note 18.
*Including discount rate changes following central bank rate increases and inflationary impacts on long-term contracts.
^#Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.

Otto de Bont, Chief Executive Officer, said:

“We delivered a strong performance in the first half of FY23, ahead of our expectations. Our focus on pricing and cost control, together with high demand for recyclates, resulted in good profitability. Revenue was up 4% as a result of price increases more than offsetting lower volumes for inbound waste.

“Our strategy to grow our leading position as a waste-to-product company is proving to be increasingly relevant with a significant number of attractive investment opportunities. Strategy execution is progressing well across our three value drivers. We increased our market share with the completion of our acquisition of Paro. We recycled more of our incoming waste with the continued investment in circular innovations, we progressed on our journey to digitise our company with the Renewi 2.0 programme, and our Mineralz & Water recovery continues. Together these programmes will deliver an additional €10m of EBIT this year and are on track to deliver their full potential.

“While the Board remains suitably cautious about the challenging macroeconomic outlook in the short term, we are confident the fundamentals of our business will allow us to grow in the medium and longer term. Waste volumes have historically been resilient through cycles and the ongoing transition to increased recycling, driven by legislation, societal pressure and innovation, will continue to support our business model.

Results

¹ The definition and rationale for the use of non-IFRS measures are included in note 18.
^# Certain September 2021 values have been adjusted to reflect a prior year adjustment as referred to in note 2.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.

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