DJ Renewi plc: Half-year report
Renewi plc (RWI)
Renewi plc: Half-year report
09-Nov-2023 / 07:00 GMT/BST
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9 November 2023
Renewi plc
Half Year Results
for the six months ended 30 September 2023
Renewi plc ("Renewi", the "Company" or, together with its subsidiaries, the "Group") (LSE: RWI), the leading European
waste-to-product business, announces its results for the six months ended 30 September 2023 ("HY24" or the "period").
Financial Highlights - in line with guidance from 4 October 2023
-- Revenue of EUR937m and underlying EBIT1 of EUR50.7m (HY23: EUR952m and EUR75.2m respectively), reflects re-based
recyclate prices together with a subdued volume environment in certain commercial waste sectors and particularly
construction & demolition ("C&D")
-- Underlying EBITDA of EUR113.6m (HY23: EUR131.9m)
-- Statutory profit after tax of EUR35.3m (HY23: EUR53.4m) and basic EPS of 42 cents (HY23: 66 cents)
-- Net cash inflow from operating activities of EUR88.8m (HY23: EUR74.0m) due to improvements in working capital
-- Core net debt* to EBITDA of 2.1x (March 2023: 1.8x) with core net debt increased to EUR383.2m (March 2023:
EUR370.6m), in line with expectations
Strategic and Operational Highlights - strong actions in HY24
Margin focus:
-- Renewi 2.0 is now successfully completed and the programme has supported productivity in HY24
-- Additional actions to be implemented in H2 to reduce SG&A and other costs by EUR15m on an annual basis,
with capability and capacity retained
Portfolio actions:
-- As previously announced, strategic review of UK Municipal on track, targeted outcome in the first half of
2024
-- Strong Q2 performance in Mineralz & Water ("M&W"), following ramp-up of sand and gravel production, with
H2 expected to show sharply improved results, in line with the performance enhancement plan
Accelerated growth:
-- Successfully commissioned a hard plastics sorting facility in Acht, Netherlands which is expected to
achieve at least group hurdle returns over the course of 2024
-- The Group had a number of customer wins including the Dutch Ministry of Defence, TotalEnergies and
Custodial Institutions Agency
-- Renewi's Specialities business Maltha, continued to achieve record-breaking performance due to
operational enhancements and strategic investments. Coolrec maintained strong volumes in the period, though
plastics prices were lower
Current trading and outlook - on track to achieve full year expectations
-- Full year guidance unchanged from trading update of 4 October 2023
-- Revenue stable as a result of targeted commercial initiatives and structural drivers, including Vlarema 8
legislation, expected to support resilient H2 demand across Commercial Waste Belgium, M&W and the Specialities
businesses which will mitigate in part continued low levels of C&D activity in the Netherlands
-- Significantly stronger EBIT performance in H2 underpinned by continued M&W earnings recovery, the initial
contribution from SG&A cost actions, pricing and further productivity initiatives. Further benefits of our margin
and portfolio initiatives, together with stabilised recyclate prices and tailwinds generated by Renewi 2.0,
underpin confidence in good progress in FY25
Strategy in place to achieve sustainable improvements in margins and cash conversion in the medium term
-- Deliver >5% p.a. organic sales growth through growth initiatives, increased recycling conversion and
targeted market share gains
-- High single digit EBIT margins
-- Free cash flow generation at least 40% of EBITDA
-- ROCE of over 15%
-- Disciplined capital allocation strategy focused on attractive and sustainable shareholder value whilst
maintaining strong balance sheet as outlined at the Group's Capital Markets Event
Otto de Bont, Chief Executive Officer, said:
"Our first half performance was in line with our expectations and previous guidance from October. 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, we are taking strong action by
reducing our SG&A cost base by EUR15m on an annual basis.
"Alongside reducing costs, we continue to benefit from previous strategic actions. For example, Mineralz & 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 H2. 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. Our Vlarema8 line in Ghent, Belgium started
ramp-up in H1 and we also commissioned our 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.
"As we look forward, our SG&A cost actions and benefits from Renewi 2.0 and the Mineralz & Water recovery are expected
to lead to higher profit and margin expansion in the second half of the year and we expect this to flow through to
FY25. 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."
The full text of the half year statement is set out below, together with detailed financial results and will be
available on the Company's website at www.renewi.com.
Virtual presentation
Renewi will host a virtual presentation at 10:30-11:30am CET today. Please register to attend the webcast here:
https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=C3E612CF-DACD-4EBF-9046-3E245751FAEA&
LangLocaleID=1033.
Today's presentation will also be available on the website once the webcast has concluded https://www.renewi.com/en/
investors.
Results
HY24 HY23# % change
UNDERLYING NON-STATUTORY
Revenue EUR937.1m EUR952.0m -2%
Underlying EBITDA1 EUR113.6m EUR131.9m -14%
Underlying EBIT1 EUR50.7m EUR75.2m -33%
Underlying EBIT1. margin 5.4% 7.9% -2.5pps
Adjusted free cash flow1 EUR24.1m EUR22.2m
Free cash flow1 EUR(1.6)m EUR(4.4)m
Free cash flow/EBITDA conversion1 -1.4% -3.3%
Return on capital employed1 8.1% 12.2%
Core net debt* EUR383.2m EUR387.7m
STATUTORY
Revenue EUR937.1m EUR952.0m -2%
Operating profit EUR64.1m EUR83.6m -23%
Profit before tax EUR45.4m EUR71.6m -36%
Profit for the period EUR35.3m EUR53.4m -34%
Basic EPS (cents per share) 42c 66c -36%
Cash flow from operating activities EUR94.7m EUR81.9m
Total net debt (including IFRS 16 leases) EUR687.9m EUR687.6m
1 The definition and rationale for the use of non-IFRS measures are included in note 18.
# Certain September 2022 values have been adjusted to reflect a prior year adjustment as referred to in note 2.
* Core net debt used for banking leverage calculations excludes the impact of IFRS 16 lease liabilities and UK PPP net debt.
For further information: FTI Consulting Renewi plc +44 203 727 1340 Anne Metz, Director of Investor Relations FTI_RWI@FTIconsulting.com +31 6 4167 9233 Alex Le May / Richard Mountain investor.relations@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. With a recycling rate of 64% which we believe to be among the highest in Europe, Renewi puts 7m tonnes of low carbon secondary materials back into reuse. This is a significant contribution to climate change mitigation and the circular economy. Our recycling protects virgin resources and avoids emissions of more than 2.5 million tonnes of CO2.
Renewi, which draws on innovation and the latest technology to turn waste into useful materials - paper, metals, plastics, glass, wood, building materials, compost and water - employs over 6,500 people who work on 154 operating sites in 5 countries across Europe and the UK. Renewi is recognised as a market leader in Benelux and a European leader in advanced recycling.
Visit our website for more information: www.renewi.com.
Chief Executive Officer's Statement
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