Renewi plc (RWI)
Q1 Trading Update
07-Jul-2020 / 07:00 GMT/BST
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07 July 2020
Renewi plc
("Renewi", the "Company" or, together with its subsidiaries, the "Group")
Q1 Trading Update
Renewi plc (LSE: RWI), the leading international waste-to-product business,
announces its first quarter trading update for the three months ended 30
June 2020.
Trading
Trading in the first quarter of FY21 was ahead of the Board's initial
Covid-19 adjusted expectations, with the total impact on earnings during the
period being EUR 12m compared with the EUR 20m previously forecast,
supporting a strong cash performance with no net outflow during the
lockdown.
Commercial Waste Netherlands volumes improved steadily through the quarter.
Core volumes for the quarter were 6% down on prior year. Bulky waste and
construction volumes continued to be resilient, offsetting reduced roller
bin collections which improved from 30% down on prior year in April to 15%
down in June. Commercial Waste Belgium volumes also improved through the
quarter from 35% down compared to the prior year in April to 21% down in May
and 15% down in June. Further volume recovery during the second quarter and
the remainder of the financial year remains dependent upon the successful
easing of lockdown restrictions, including in specific sectors such as
hospitality, and the speed and extent of economic recovery.
Recycled paper prices rose briefly in April and May but have since reduced,
metal prices dropped sharply in May. We were pleased to announce a signed
agreement with Shell and Nordsol to convert out of date food waste into
bio-LNG, an important first step in creating a new market for low carbon
fuel in the Netherlands.
The new Mineralz & Water Division performed slightly better than expected.
Intake at ATM has slowed slightly, especially for the waterside and pyro.
Soil processing volumes have increased to 35% of capacity, with further
increases likely in the second half as new capacity is commissioned for
filler, sand and gravel processing and storage. Volumes at Mineralz fell
sharply in April but recovered well in May and June.
Specialities has performed in line with our expectations. Coolrec has
reopened Belgian and French facilities that had to close due to lack of
inbound waste in April. For Maltha, demand for glass cullet is expected to
remain at reduced levels, particularly in France and Portugal. As previously
indicated, Municipal saw reduced income while Household Waste Recycling
Centres were closed in April and May; these reopened during June.
Cost plans put in place across all businesses have delivered as expected,
with over EUR 10m saved in the quarter through swift cost action. As
previously announced, measures to reduce operating costs and capital
expenditure and to optimise cash flow will save over EUR 60m of cash during
the current financial year.
Cash and Leverage
Core net debt as at 30 June 2020 was EUR 413m, a EUR 44m improvement from
EUR 457m at 31 March 2020. Adjusting for the EUR 50m benefit (EUR 6m at
March 2020) of government measures to delay VAT and payroll taxes into the
next quarter, this still represented an underlying cash neutral performance,
reflecting strong control of working capital and capital expenditure. The
resulting quarter end leverage was below 3.0x (3.2x adjusting for the
taxation deferrals), with significant headroom against the Group's adjusted
bank covenants of 5.5x to September 2020 which then increase to 6.0x to
March 2021.
Outlook
Notwithstanding the encouraging start to the year, the outlook for FY21
remains dependent on the nature and timing of the lifting of remaining
lockdown restrictions and the speed of economic recovery. We remain alert to
the potential for a decline in late cycle activities such as construction.
We are also developing plans to accelerate further cost reduction measures
if volumes fail to recover to anticipated levels.
Longer term, waste volumes are typically resilient through economic cycles
and the transition to increased recycling remains a strong long-term
structural growth driver for the Group. The recovery of earnings at ATM and
our Renewi 2.0 programme are expected to further support sustained future
earnings growth.
For further information:
FTI Consulting Renewi plc
+44 20 3727 1340 www.renewiplc.com [1]
Richard Mountain
About Renewi
Renewi is a leading waste to product company that gives new life to used
materials every day. We have around 7,000 employees working at 162 operating
sites across Europe. Our extensive operational network means we are always
close to our customers.
For Renewi, waste is a state of mind, and an opportunity. Our many years of
knowledge and experience, combined with a broad range of services, allow us
to offer sustainable, practical recycling solutions. We use innovation and
the latest technology to turn waste into useful materials such as paper,
metal, plastic, glass, wood, building materials, compost and energy. In
other words, we turn today's waste into tomorrow's raw materials. The result
of our work is less waste and contamination, a smarter use of scarce raw
materials, and a reduction in carbon emissions. This means that we are
contributing towards a cleaner, circular world in which we "waste no more".
Visit our website for more information: www.renewiplc.com [2].
ISIN: GB0007995243
Category Code: TST
TIDM: RWI
LEI Code: 213800CNEIDZBL17KU22
Sequence No.: 74069
EQS News ID: 1087481
End of Announcement EQS News Service
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(END) Dow Jones Newswires
July 07, 2020 02:00 ET (06:00 GMT)
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