Renewi board confident that 2017/18 will be "year of good progress" for company

Written by: Editorial staff | Published:

Newly-created international waste-to-product business, Renewi, has announced its results for the year ended 31 March 2017 and expressed confidence that, in line with its expectations, 2017/18 is expected to be a year of good progress.

Business performance highlights include:

  • Robust trading performance, with revenue and underlying profit before tax at constant currency in line with the board’s expectations
  • Commercial division in legacy Shanks business performed well, delivering trading profit growth of 27% at constant currency and improvement in return on operating assets of 320bps.
  • Hazardous waste division in legacy Shanks business performed well, delivering trading profit growth of 9% at constant currency and improvement in return on operating assets of 360bps.
  • Municipal division in the UK and Canada are reported to have generated a trading loss impacted by "very difficult market conditions and operational challenges as previously reported": recovery plan is said to being executed by new divisional management
  • VGG businesses delivered strongly improved performance in calendar year 2016 with 23% increase in EBITDA, prior to merger completion, driven by top-line revitalisation and cost reduction initiatives

Financial summary:

  • Overall performance in line with the board’s expectations
  • Revenue up by 27% (15% like-for-like, 14% at constant currency)
  • Trading profit up by 9% to £36.5m (down by 2% like-for-like, down 9% at constant currency)
  • Underlying profit before tax up by 22% to £25.7m (up by 7% like-for-like, flat at constant currency)
  • Underlying EPS down 12% to 3.7p (adjusted for the rights issue)
  • As previously advised, total Group exceptional and non-trading charges of £87.1m, principally reflecting merger costs and UK municipal business (2016: £23.5m), resulting in a statutory loss before tax of £61.4m.
  • Year end core net debt slightly better than expected at £424m, resulting in a net debt to pro forma EBITDA ratio of 2.8x.
  • Final dividend maintained at 2.1p per share (adjusted for the rights issue)

According to the board, the company's outlook is looking strong.

"Having successfully completed the merger with VGG, our key priorities for the year ahead are to integrate our legacy businesses and to generate growth from strong underlying trading and successful synergy delivery. In parallel, we will fix the municipal division and build up momentum for sustained growth and earnings accretion in 2018/19. While alert to macroeconomic developments, the board remains confident that 2017/18 will be a year of good progress, in line with its expectations. Current trading for the year to date and the initial stages of the integration process support this view," said Peter Dilnot, chief executive officer.

"Looking forward, our growth drivers remain strong. Renewi plays an important role in the emerging circular economy, a market that is expected to grow rapidly in the coming years with the support of European Union and government legislation. Moreover, the fully integrated Renewi has a compelling offering for customers, combining local service, international expertise and an unrivalled breadth of products. This strong positioning, coupled with synergy delivery and the roll-out of our proven margin expansion initiatives across Renewi, will deliver sustainable growth, enhanced margins and attractive returns."

The CEO went on to point out that the company's priorities for the year ahead "are to integrate our legacy businesses and to generate growth from strong underlying trading and successful synergy delivery. We have already built up positive momentum as Renewi and are on track with the execution of our merger plans."

Dilnot added a note of confidence. "Looking forward, our position in the emerging circular economy, coupled with the benefits of the merger, will deliver sustainable growth, margin expansion and attractive returns."


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