REG-Renewi plc Renewi plc: Third Quarter Trading update and material upgrade to expectations

RenewiAnnouncement

28/01/2022 07:05

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   Renewi plc (RWI)
   Renewi plc: Third Quarter Trading update and material upgrade to
   expectations

   28-Jan-2022 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   28 January 2022

                                        

                                   Renewi plc

                                        

   ("Renewi", the "Company" or, together with its subsidiaries, the "Group")

                                        

       Third Quarter Trading update and material upgrade to expectations

                                        

   Renewi plc  (LSE: RWI),  the leading  European waste-to-product  business,
   announces its trading update for the third quarter ended 31 December  2021
   ("third quarter" or the "period"). 

    

   Overall trading  for the  Group in  the period  has continued  to be  very
   strong, driven by continuing  high recyclate prices,  and the Board  today
   announces a  further material  upgrade to  its expectations  for the  year
   ending 31 March  2022.  Underlying  EBIT is now  expected to  be at  least
   €120m for the year (FY21: €73m).

    

   Trading and cash performance

    

   The Commercial Waste Division  has continued to perform  very well in  the
   third quarter.  Recyclate prices have  consistently traded at high  levels
   compared to  the  prior  year, more  than  offsetting  softening  volumes,
   particularly in Covid-impacted sectors such as hospitality and later cycle
   construction.  Recyclate prices have been driven by positive supply/demand
   factors and high commodity prices as  well as by an increasing demand  for
   secondary materials.  Volumes in the Netherlands and Belgium in the  third
   quarter were 91% and 93% of prior year respectively.  While labour markets
   have tightened,  this  has  not  to  date  materially  impacted  costs  or
   operational effectiveness.

    

   The  Mineralz  &  Water  Division  performed  in  line  with  our  revised
   expectations.  Mineralz and the waterside of ATM have continued to perform
   well, offsetting lower volumes  and increased disposal  costs on the  soil
   treatment line.  In November 2021, the Dutch National Institute for Public
   Health and  the Environment  (RIVM)  published a  report to  evaluate  the
   environmental  standards   for  secondary   mineral  products,   including
   thermally cleaned soil  (TGG) and bottom  ashes from incinerators  amongst
   others.  It  concluded  the  current  legislation  is  not  effective  and
   amendments will be brought forward.  This should bring much-needed clarity
   to this important area of secondary materials.

    

   The Specialities Division  performed in line  with our expectations,  with
   ongoing benefits  from  recyclate  prices  and  a  strong  performance  at
   Coolrec.  UK Municipal continues to benefit from recyclate prices,  offset
   by costs from a fire in Cumbria in November.

    

   We have  continued to  make  good progress  with our  circular  innovation
   investments,  with  construction   contracts  now  awarded   or  in   late
   negotiations for  the  Flemish advanced  sorting  lines and  for  the  new
   plastics line at  Acht.  Commissioning of  both the bio-LNG  and new  food
   waste handling  hall in  Amsterdam is  progressing well.   The Renewi  2.0
   programme remains on track  to deliver its target  net benefit of €5m  for
   the year.

    

   Cash performance continued to be strong.  Core net debt (excluding IFRS 16
   lease liabilities) at 31 December 2021 was €301m, representing a reduction
   of €35m since  30 September  2021 and the  leverage ratio  has reduced  to
   1.52x from 1.82x at 30 September 2021.

    

   Outlook

    

   The continuing  strong  performance in  the  third quarter,  supported  by
   confidence that recyclate prices will continue to be robust in the  fourth
   quarter, means  that the  Board  is today  announcing a  further  material
   upgrade to its expectations for the year ending 31 March 2022.  Underlying
   EBIT is now  expected to  be at  least €120m  for the  year (FY21:  €73m).
   Recyclate margins are  expected to  contribute around  €40m of  additional
   EBIT for the full year compared to the prior year. 

    

   Whilst in the short  term we are alert  to the macroeconomic  environment,
   inflationary pressures and to recyclate prices, we remain confident in the
   medium and  long-term  outlook  for the  business.  Our  strategic  growth
   programme, driven  by our  Innovation  pipeline, is  on track  to  deliver
   significant additional earnings over the  next three years and beyond,  as
   is our internal Renewi2.0 digitisation and simplification programme. While
   ATM's recovery has been delayed, as reported at the interims, we expect it
   will generate material additional earnings in the medium term as well.

    

   Our business model  enables advanced circular  economies to achieve  their
   carbon reduction targets, meet consumer needs and corporate ESG goals such
   as secondary  material  content  targets.  We  continue  to  see  positive
   structural growth drivers  as the Dutch  and Belgian regional  governments
   progressively   tax   carbon   emitters,   incentivise   recycling    over
   incineration, and promote the use of secondary materials.  We consistently
   see long-term growth  opportunities across  our markets as  we assist  our
   customers to recycle more and to use our high-quality secondary materials.

    

    

    

   For further information:
                                   
    
   Renewi plc
                                  Paternoster Communications
    
                                   
   Adam Richford, Head of IR
                                  Tom Buchanan
   +44 7976 321 540
                                  +44 20 3012 0241
    
   Michelle James, Communications Ben Honan

   +44 7773 813 180               +44 20 3012 0241

                                   
    1 www.renewi.com
                                   
    

    

   About Renewi

    

   Renewi is a pure-play recycling company  with a focus on extracting  value
   from waste and used materials rather than disposal through incineration or
   landfill. The company also plays a key role in limiting resource  scarcity
   through the creation  of secondary  materials, and by  so doing  addresses
   both social and regulatory trends  and contributes to creating a  cleaner,
   greener world.

    

   Renewi's vision  is to  be  the leading  waste-to-product company  in  the
   world's most  advanced  circular  economies. By  opting  to  recycle,  the
   company avoids emissions of  more than 3  million tonnes of  CO2 and as  a
   result  plays  a   part  in   contributing  to   a  sustainable   society,
   transitioning to a  circular economy  and driving the  progress needed  to
   halt climate change.

    

   Renewi, which draws on innovation and the latest technology to turn waste
   into useful materials - paper, metals, plastics, glass, wood, building
   materials, compost and energy - employs over 6 500 people who work on 165
   operating sites in 6 countries across Europe and the UK. Renewi is
   recognised as a market leader in Benelux and a regional European leader in
   recycling.

    

   Visit our website for more information:  2 www.renewi.com.

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   ISIN:           GB00BNR4T868
   Category Code:  TST
   TIDM:           RWI
   LEI Code:       213800CNEIDZBL17KU22
   OAM Categories: 3.1. Additional regulated information required to be
                   disclosed under the laws of a Member State
   Sequence No.:   139406
   EQS News ID:    1273848


    
   End of Announcement EQS News Service

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