06 August 2024
Renewi plc
Q1 Trading Update
Renewi plc ("Renewi" or the "Group") (LSE: RWI.L: Euronext Amsterdam: RWI.AS), a leading European waste-to-product company, provides the following trading update for the three months ended 30 June 2024 ("Q1").
Financial Highlights (note financial results are shown for continuing operations, excluding UK Municipal given its status as an asset held for sale)
- Revenue: €434.4m, 3% year-on-year growth underpinned by higher core volumes and input prices in both Commercial Waste and Specialities (FY24: €421.7m). In particular, volumes for Commercial waste in the Netherlands continued to recover, with Belgium showing a slowdown of topline growth.
- Underlying EBIT: €22.3m, 3% higher year-on-year. The contribution of lower one-off gains in the Commercial Waste division compared to prior year was largely offset by higher input prices and the impact of SG&A cost reduction in Commercial Waste (FY24: €21.7m).
- Core net debt: €430.8m compared to €368.1m at the end of March 2024 largely driven by seasonal working capital, which is expected to normalise over the course of the year.
- Sale of UK Municipal: CMA approval has now been obtained and good progress made on the remaining few Conditions Precedent required for completion. Timing remains on track to complete over the course of this calendar year.
Delivery against strategic objectives
Renewi continues to deliver against its medium-term strategic priorities of portfolio optimisation, strengthening its core operations, and organic growth of >5%.
Portfolio optimisation
The sale of UK Municipal to Biffa, announced on 30 May 2024, has progressed well and is on track for completion as expected. Mineralz & Water ("M&W") has continued the positive momentum that started in the 2H of FY24, with the business on track to deliver a year of good progress in FY25 in line with its recovery plan.
Stronger platform
The Group's Simplify programme, announced in FY24 to streamline staff functions and reduce costs, continued to yield benefits and remains on track to deliver the expected run rate savings in FY25. The roll out of Group's Future Fit digitisation programme which will replace legacy IT systems is also progressing well, giving the Group a stronger foundation to improve future efficiency and drive growth in the medium term.
Organic growth
The acceleration of the Commercial Waste sales strategy, initiated in the second half of FY24 has generated further new business wins in Q1, particularly in the small-to-medium enterprise segment, which has helped to mitigate the effect of ongoing mixed market conditions. Within Specialities, Coolrec and Maltha continued their strong growth performance, fuelled by additional volume from new contracts combined with investments in quality and accretive operational improvements, which continued to yield benefits.
During the quarter Renewi announced its intention to partner with Freepoint Eco-Systems, a leading provider of advanced plastic recycling solutions. The partnership aims to divert end-of-life plastics from incineration by developing the sorting and treatment infrastructure. The goal is to supply up to 80,000 tonnes of feedstock to Freepoint Eco-Systems' first European advanced recycling facility, located in Ghent, Belgium.
In May 2024, Renewi announced that it will offer an innovative digital CO2 and recycling reporting tool to all its Dutch customers this year. This tool meets the European Corporate Sustainability Reporting Directive ("CSRD"). The new CSRD requires companies to report their impact on climate, society and policy, with waste being a key theme. The Company has commenced offering its reporting tools to companies and recently announced its collaboration with Heijmans, a leading Dutch construction company, to help provide them with a waste monitor via the MyRenewi portal.
Q1 FY25 performance
Throughout the quarter recyclate prices in the market remained largely stable, with a slight year-on-year increase across most categories, except for recycled wood.
The Commercial Waste division continued to experience mixed demand conditions, reflective of the wider economic backdrop in the region.
Cost of waste was higher due to higher transport and treatment costs caused by temporarily constrained incinerator capacity. The construction sector in the Netherlands remained subdued during the quarter though incoming volumes from construction and demolition waste improved in Q1.
SG&A costs were lower in Q1, reflecting the impact of the Simplify cost initiatives and further reduction of excess capacity. The Group's cost and efficiency programmes are expected to deliver an increasing benefit through the FY25 as initiatives reach full run rate impact.
Within Specialities, strong revenue growth continued from both Coolrec and Maltha. However, M&W revenues remained largely flat as the growth in soil and water treatment was offset by the planned reduction in revenue from low-margin activities, which were discontinued last year, including bottom ash treatment. Underlying EBIT grew strongly across the Specialties division, fuelled by M&W in line with its recovery plan and by Coolrec also delivering strong EBIT growth.
Outlook
Whilst market conditions remain mixed, particularly in the Commercial Waste division, the benefits of the Group's commercial and cost initiatives underpin the continued expectation of good progress in FY25, with growth momentum anticipated to increase as the year progresses. As previously guided, leverage is expected to increase in the short term, to approximately 2.9x upon completion of the sale of UK Municipal, before reducing as the benefits of materially stronger cash generation are delivered. Looking ahead, Renewi is committed to delivering on its medium-term targets of a high-single digit underlying EBIT margin and organic annual revenue growth of >5%.
Commenting, Renewi's CEO Otto de Bont said: "We continue to deliver on our strategic objectives of portfolio optimisation strengthening our platform and accelerating organic growth. Throughout the quarter we continued to see the benefits of our Simplify programme, which is helping to continually drive improved performance and efficiency. Looking ahead, our FY25 outlook is unchanged, reflecting our strong foundation and our strategic progress."
For further information: | |
Renewi plc Anne Metz, Director of Investor Relations +31 6 4167 9233 investor.relations@renewi.com | FTI Consulting Richard Mountain / Ben Fletcher +44 203 727 1340 renewi@fticonsulting.com |
About Renewi
Renewi is a pure-play recycling company that focuses on extracting value from waste and used materials rather than disposing of them through incineration or landfill. The company plays an important role in combating resource scarcity by creating circular materials. In giving new life to used materials, Renewi addresses both social and regulatory trends, contributing to a cleaner and greener world.
Our vision is to be the leading waste-to-product company in the world's most advanced circular economies. With a recycling rate of 63.2%, one of the highest in Europe, Renewi puts 6.6 million tonnes of low-carbon circular materials back into use each year. This contributes to mitigating climate change and promotes the circular economy. Our recycling efforts help to protect natural resources and prevent more than 2.5 million tonnes of CO2 emissions annually.
Renewi leverages innovation and the latest technology to turn waste into circular materials such as paper, metals, plastics, glass, wood, building materials, compost, and water. We employ over 6,000 people across 154 operational sites in five countries in Europe. Renewi is recognised as a leading waste-to-product company in the Benelux region and a European leader in advanced recycling.
Visit our website for more information: www.renewi.com.
Cautionary note regarding forward looking statements
This announcement contains certain statements which are, or may be deemed to be, forward looking statements with respect to the expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information of Renewi. These forward looking statements can be identified by the fact that they do not relate to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the Renewi board, in the light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes appropriate. By their nature, forward looking statements involve risk and uncertainty and the factors described in the context of such forward looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward looking statements.
Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this announcement. Except as required by applicable law and/or regulation Renewi does not assume any obligation to update or correct the information contained in this announcement.
