LONDON (ShareCast) - (Sharecast News) - Waste-to-product specialist Renewi reported first-half revenue of €937m on Thursday, with an underlying EBIT of €50.7m reflecting re-based recyclate prices and subdued volume in certain waste sectors, including construction and demolition.
The results for the London-listed firm marked a decline from the same period last year when revenue was €952m and underlying EBIT was €75.2m.

Underlying EBITDA for the half-year was €113.6m, down from €131.9m a year earlier, while statutory profit after tax was €35.3m with basic earnings per share of 42 euro cents, compared to €53.4m and 66 cents, respectively, in the prior year.

Despite the challenges, the company reported a net cash inflow of €88.8m from operating activities due to improvements in working capital.

Renewi said its core net debt-to-EBITDA ratio stood at 2.1x, in line with expectations.

Regarding strategic and operational highlights, Renewi completed its Renewi 2.0 programme, which supported productivity in the half-year.

The company also planned to implement additional cost-saving measures in the second half, targeting a reduction of €15m in selling, general and administrative expenses and other costs annually.

Renewi said it was conducting a strategic review of its UK municipal business, with the targeted outcome expected in the first half of next year.

In the Mineralz and Water segment, the company reported strong performance in the second quarter, expecting improved results in the second half following the ramp-up of sand and gravel production.

The firm said it achieved accelerated growth by successfully commissioning a hard plastics sorting facility in the Netherlands, with expected returns by 2024.

Renewi also secured several new customers, including the Dutch Ministry of Defence, TotalEnergies, and the Custodial Institutions Agency.

The speciality business Maltha continued to achieve record-breaking performance due to operational enhancements and strategic investments, while Coolrec maintained substantial volumes despite lower plastics prices.

Renewi said it was on track to achieve its full-year expectations, with revenue expected to remain stable due to targeted commercial initiatives and structural drivers.

The company expected significantly stronger EBIT performance in the second half, supported by earnings recovery in Mineralz and Water, cost actions, pricing adjustments, and productivity initiatives.

"Our first half performance was in line with our expectations and previous guidance from October," said chief executive officer Otto de Bont.

"The period saw recyclate prices reverting to more normalised levels, following the unprecedented Covid peak.

"Volumes mostly stabilised, except in construction and demolition waste in the Netherlands."

In response, de Bont said the company was taking strong action by reducing its sales, general and administrative cost base by €15m on an annual basis.

"Alongside reducing costs, we continue to benefit from previous strategic actions.

"For example, Mineralz and Water have ramped up production of sand and gravel in our soil cleaning business as of September, and we expect to show sharply improved results in the second half.

"We continued to invest in future organic growth; at Maltha the operational enhancements enabled the business to achieve a record-breaking performance in the period."

Otto de Bont said the firm's Vlarema8 line in Ghent, Belgium, started ramp-up in the first half, adding that it also commissioned its hard plastics sorting facility in Acht, Netherlands.

"All of these actions will contribute to a stronger second half and our medium-term strategic objectives.

"On the commercial front, Renewi won a number of significant customers as a result of our strong value proposition, such as the Dutch Ministry of Defence, TotalEnergies and Custodial Institutions Agency.

"As announced in October, we are undertaking a strategic review of our UK Municipal business, with an outcome targeted for the first half of 2024."

Looking ahead, Otto de Bont said Renewi's cost actions and benefits from 'Renewi 2.0' and the Mineralz and Water recovery were expected to lead to higher profit and margin expansion in the year's second half, flowing through to the 2025 financial year.

"Renewi's resilience and adept handling of price and cost dynamics have ensured a stable financial position, and we reconfirm our intention to resume dividend payments at the end of this financial year.

"As a company, we are proud of the critical role Renewi is playing in closing the loop to a circular economy, and we look forward to continuing to enable the decarbonisation of our world while delivering value to our shareholders."

At 1100 GMT, shares in Renewi were up 0.35% at 581p.

Reporting by Josh White for Sharecast.com.

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