Renewi plc pre-close trading update
04 April 2023
Renewi, the leading European waste-to-product business, announces its pre close trading update for the year ended 31 March 2023 ahead of the results presentation on 25 May 2023.
Otto de Bont, Chief Executive Officer said:
“Trading in the final quarter of the year has been good and we expect year end profit to be slightly ahead of market expectations1. We are pleased to see strong customer loyalty resulting in low churn and stabilising volumes. Inflation impact in the quarter was largely mitigated by our pricing strategy and cost control.
In FY24 we will continue to focus on our strategic agenda. We will continue to deliver additional profit from the value drivers, which will offset the ongoing headwinds we have seen in the second half of 2022. While price levels of secondary materials have normalised, the inflation impacts on our business will continue but are expected to ease over the course of 2023. We are stepping up our commercial efforts to build on our leading position in Belgium and the Netherlands and grow in specific market segments, such as healthcare and construction and demolition.”
Trading performance trends continued in Q4
In the Commercial Waste Division volumes showed slight recovery in the Netherlands and in Belgium the decline in volumes has moderated. Cost increases were mitigated by strong price management combined with cost controls and stable recyclate prices.
The Mineralz & Water Division continued with good performance on the waterside whilst making gradual progress on certification and future outlets for gravel, sand and filler. The offtake of the remaining stock of TGG is progressing with several contracts signed or underway.
Within the Specialities Division, Coolrec and Maltha continue to perform well. Certain UK Municipal PPP contracts will require additional onerous contract provisions of around €20m as an exceptional charge in FY23, largely driven by inflation related increases in cost assumptions and lower volumes.
As previously announced, following the positive outcome of the EU state aid investigation of Walloon landfills, we will release the €15m provision in FY23 as a credit to exceptional items.
Progress continued on the innovation pipeline during Q4 with Ghent commissioning ongoing and activity continuing to ramp up at both the Puurs and Acht sites, which are well on track.
Core net debt as at 31 March 2023 is expected to be around €370m and the leverage ratio around 1.9x in line with our expectations.
1 Consensus expectations are for underlying Group FY23 Revenue of €1.9bn, EBITDA of €254m and EBIT of €127m. See Analysts & Coverage section of the Renewi investor relations website for more details
Trading in the final quarter of the year has been good and we expect year end profit to be slightly ahead of market expectations. Whilst the macroeconomic outlook for 2023 remains uncertain, recyclate prices and volumes are stabilising, pricing continues to compensate for cost inflation and we remain focused on increasing valorisation as we increase our recycling rate and the quality of our secondary raw materials.
We are executing our growth investments and seeing further opportunities to deploy capital at attractive returns to meet circularity driven national and EU legislation and to drive market consolidation. The demand for higher quality low carbon secondary materials is steadily increasing, requiring more advanced production processes, which Renewi is developing. This will strengthen our market leading position in Europe’s most advanced circular economies.