Renewi reports 'tangible progress' in first half
By Josh White
Date: Tuesday 12 Nov 2024
(Sharecast News) - Renewi reported a solid first-half performance on Tuesday, with revenue from continuing operations up 4% to €874.5m, driven by strong pricing in its commercial waste division and significant growth in specialities.
The FTSE 250 company said underlying EBIT increased 9% to €53.2m, supported by a turnaround in the Mineralz & Water (M&W) division and ongoing margin improvement programs, raising the EBIT margin to 6.1%.
Strategic progress included the completion of Renewi's divestment from the UK municipal division in October, a move intended to improve both cash flow and underlying margins.
Following the sale, core net debt was reduced to €357.7m, with an expected annual leverage reduction of 0.4x to 0.5x, aiming to reach a core debt-to-EBITDA ratio of 2x.
Cost efficiency measures continued, delivering €15m in sales, general and administrative savings and further operational simplification in logistics, processing, and site management.
In its commercial waste division, Renewi said it achieved a 3% revenue increase despite subdued volumes, attributing growth to pricing actions that offset higher handling costs linked to limited incinerator capacity.
The M&W division meanwhile saw a fivefold increase in EBIT to €8.8m due to increased soil and water treatment activities, lower utility costs, and demand for secondary building materials.
Specialities reported a 19% revenue rise and 10% EBIT growth, benefiting from higher volumes and operational enhancements.
Renewi said its operational improvements also included advances in working capital management, resulting in a €47m improvement in trade receivables since March.
The company had also closed low-yielding sites, including Tisselt and Mijdrecht, and streamlined its truck fleet by 3.2%.
It also undertook initiatives to meet growing sustainability demands, including partnerships for chemical recycling of soft plastics and alternative fuels.
Renewi recently joined VeenIX for a large-scale infrastructure project in the Netherlands, contributing 40,000 tons of recycled concrete and 130,000 tons of recycled granulate.
The firm's outlook for the 2025 financial year remained unchanged, with medium-term targets focused on high single-digit EBIT margins, over 5% organic revenue growth, and free cash flow conversion exceeding 40%.
"Our half year results show tangible progress on our commitment to build a strong platform," said chief executive officer Otto de Bont.
"The successful divestment of UK municipal on 10 October and the strong performance of M&W, supported by strategic investments and actions over the last two years, have allowed us to move beyond our legacy challenges, positioning us for future growth.
"We have made significant progress in strengthening our business."
De Bont said the completion of the company's sales, general and administrative efficiency programme was generating annual savings of €15m, adding that ongoing initiatives were on track to standardise and digitise operations, further enhancing its competitive edge and the strength of its growth platform.
"Our pricing strategies for inbound services coupled with generally stable outbound recyclate prices have partially mitigated the impact of the slightly lower volumes due to subdued economic and industrial activity.
"Organic growth drivers include the successful launch of our customer CSRD reporting tool in the Netherlands, upgrades in our M&W operations with a new jetty commissioned in early November increasing degasification capacity, and customer wins underlining our material-focused sales strategy such as the partnership with VeenIX and Rijkswaterstaat for construction material recycling.
"Looking ahead, whilst the near term macro environment is not without challenges, we expect our full year results to be in line with market expectations and we remain confident progressing towards our medium term targets, supported by regulatory tailwinds and a strengthened platform for growth, all delivered by a dedicated team."
At 0829 GMT, shares in Renewi were down 5.47% at 578p.
Reporting by Josh White for Sharecast.com.
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