Q1 Trading Update
06/08/2024 07:00
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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