Renewi plc (LSE: RWI), the leading European waste-to-product business, announces its unaudited results for the year ended 31 March 2023. ("Renewi", the "Company" or the "Group")

Financial Highlights

• Revenue of €1,892m and underlying EBIT^# of €132.9m similar to prior year (FY22: €1,869m and €133.6m respectively)
• Effectively mitigated lower recyclate prices, lower volumes and high inflation through ongoing cost control and customer price increases
• Basic EPS reduced from 93 cents to 79 cents
• Group underlying EBIT margin of 7.0% (FY22: 7.1%) with Commercial, Maltha and Coolrec all operating close to 10% margin
• Statutory profit after tax of €66.6m (FY22: €75.4m)
• Core net debt* increased to €370.6m (FY22: €303.0m) due to the acquisition of Renewi Westpoort (Paro) during the year. Net debt to EBITDA increased to 1.8x (FY22:1.4x)

Strategic and Operational Highlights

• Good progress made on our key strategic initiatives to deliver €60m of additional EBIT by FY26, with €20m delivered so far, Renewi 2.0 largely completed, €60m of the investment pipeline deployed and Mineralz & Water recovery ongoing
• Customer net promoter score increased from 3 to 18, supported by digitisation and process improvements
• Volumes lower due to reduced activity in certain market segments in the Netherlands, increased pressure from secondary disposers and focus on margin accretive volumes
• Recycling rate (rebased) increased to 63.6%, resulting in 7mT of secondary materials being put back into reuse
• Scope 1, 2 and 3 emissions methodology externally validated and application for SBTi underway

Outlook

• The Group continues to trade in line with market expectations for FY24¹
• Recycled metal, paper, and plastics prices expected be more stable around current levels in FY24, except wood which remains strong
• Price increases and tailwinds generated by Renewi 2.0, Mineralz & Water recovery and investments are expected to cover cost inflation including energy and wages
• Ambition to accelerate revenue growth targeting €3bn in five years at high single digit margins as a minimum. Growth will be achieved through market share gains, by extracting more value from waste by deploying advanced recycling and by targeted acquisitions. EBIT improvement is expected to grow even faster, driven by growth and cost reduction through digitisation
• Cash generation expected to improve consistently over time with Covid tax deferrals and shipment of Mineralz & Water TGG coming to an end
• Recommencement of a dividend for FY24 alongside a continued programme to invest capital in our core businesses and potential further acquisitions to drive growth

^# The definition and rationale for the use of non-IFRS measures are included in note 17.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.
¹ Consensus expectations are for underlying Group FY24 Revenue of €1.96bn, EBITDA of €258m and EBIT of €128m. See Analysts & Coverage section of the Renewi investor relations website for more details

Results

¹The definition and rationale for the use of non-IFRS measures are included in note 17.
^#Certain March 2022 cash flow and debt values have been adjusted to reflect prior year adjustments 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.

Commenting on these results, Otto de Bont, Chief Executive Officer, said:

“Renewi has had another successful year. Thanks to the great efforts of our employees and the loyalty of our customers we have been able to cope with some extraordinary circumstances, including high inflation. We have also achieved significant progress with the execution of our strategy: increasing our recycling rate, our investments in advanced sorting in Belgium, producing secondary materials to the highest standards for children’s toy production and extending our leading position in the Netherlands by a key acquisition in the construction and demolition market in Amsterdam.

“Our purpose has always been to give new life to used materials, and our vision is to be the leading waste-to-product company in Europe’s most advanced circular economies. We are proud to be the leading operator in the Netherlands and Belgium, where the adoption of the circular economy is one of the highest within the European Union. We have made significant progress during the year to build on our position as a leader in the circular economies in which we operate.

“Although the macroeconomic environment remains unpredictable, Renewi has proven that it is able to operate successfully in the recent years of high volatility, adapting our cost structure to reduced volumes and protecting our margins by passing on cost increases to customers. Our dynamic pricing policy, where we link the price for our waste collection to the index price of the recyclates we produce from waste, has proven successful, especially in times where some recyclate prices fluctuate. We expect recyclate prices to remain more stable at normalised levels in the coming year. Volumes in the year are expected to develop in line with economic activity.

“With the Renewi 2.0 programme benefitting the business, the recovery of Mineralz & Water progressing and the investment in new lines coming on stream, we are confident in Renewi’s ability to grow in the future. Our investment programme is ongoing, and the business continues to identify investment opportunities that are expected to yield strong returns. In addition, Renewi anticipates a consistently improving cash position going forward due to efficiencies across the business and an end to deferred Covid tax payments.  We now expect to be in a position to pay a dividend for FY24.

“Renewi is now well positioned to focus on growing both the top line and profitability of its core businesses for the longer-term. Over the next five years, our aim is to accelerate revenue growth targeting €3bn at high single digit margins as a minimum. We will achieve growth through market share gains, by extracting more value from waste by deploying advanced recycling and by targeted acquisitions. EBIT improvement is expected to grow even faster, driven by growth and cost reduction through digitisation.

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