Renewi raises expectations after ‘very strong’ third quarter

Waste recovery company Renewed reported “very strong” third-quarter trading in an update on Friday, signaling a significant improvement in its expectations for the year.

The London-listed company said global trading for the three months to Dec. 31 was strong, driven by continued high prices for recycled materials.

As a result, Renewi said it now expects underlying EBIT to be at least €120 million for the 12 months ending March 31, compared to €73 million for the fiscal year 2021.

The company said its commercial waste division continued to perform “very well” in the third quarter, with recycled material prices consistently at high levels year-over-year, more than offsetting lower volumes, in particularly in sectors affected by Covid such as hospitality and later. cycle building.

“Prices for recycled materials were driven by positive supply and demand factors and strong raw material prices as well as growing demand for secondary materials,” the council said in its statement.

“Volumes in the Netherlands and Belgium in the third quarter were 91% and 93% respectively of the previous year.

“While labor markets have tightened, this has not had a significant impact on costs or operational efficiency to date.”

Renewi said its Mineralz and Water division performed in line with its revised expectations, with Mineralz and the water side of ATM performing well, offsetting lower volumes and higher disposal costs on the line. soil treatment.

In November, the Dutch National Institute for Public Health and the Environment (RIVM) released a report to assess environmental standards for secondary mineral products, including thermally cleaned soils and bottom ash from incinerators, among others.

It concluded that the current legislation was not effective, with amendments to be proposed, which Renewi said should bring “much needed clarity” to this particular area of ​​secondary materials.

The company’s specialty division performed in line with expectations, with continued recycled material price advantages and a strong performance at Coolrec.

British municipal commerce benefited from the prices of recycled materials, offset by the costs of a fire in Cumbria in November.

“We continued to make good progress with our investments in circular innovation, with construction contracts now awarded or under negotiation for the Flemish advanced sorting lines and for the new plastics line in Acht,” said board of directors.

“The commissioning of bio-LNG and the new food waste treatment hall in Amsterdam is progressing well.

“The Renewi 2.0 program remains on track to achieve its net profit target of €5 million for the year.”

The company said its cash position was strong, with core net debt before IFRS 16 lease liabilities as of December 31 totaling 301 million euros, a reduction of 35 million euros since September 30, while the leverage ratio was reduced to 1.52x from 1.82x over the year. same period.

Looking ahead, Renewi said continued strong performance in the third quarter, buoyed by confidence that recycled material prices would remain robust in the fourth quarter, led to a further upward revision to expectations for the year ending. March 31.

He said recycling margins are expected to contribute around €40 million to additional EBIT for the full year, compared to the prior year.

“While in the short term we are attentive to the macroeconomic environment, inflationary pressures and price recycling, we remain confident in the medium and long-term outlook for activity.

“Our strategic growth program, driven by our innovation pipeline, is on track to generate significant incremental revenue over the next three years and beyond, as is our internal Renewi 2.0 digitization and simplification program.

“While ATM’s takeover has been delayed, as noted in the intermediaries, we expect it will also generate significant incremental revenue in the medium term.”

Renewi said its business model is designed to enable “advanced circular economies” to meet carbon reduction targets, meet consumer needs and corporate ESG goals, such as material content targets. secondary.

“We continue to see positive structural growth drivers as Dutch and Belgian regional governments gradually tax carbon emitters, encourage recycling over incineration and promote the use of secondary materials.

“We consistently see long-term growth opportunities in our markets as we help our customers recycle more and use our high-quality secondary materials.”

As of 10:52 GMT, Renewi shares were up 0.61% at 661p.

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