Renewi forecasts strong end to year after resilient first half

Recycling specialist Renewi said on Tuesday that it was set for a full-year performance "materially" above expectations.

The London-listed firm, which employs 6,800 across multiple European sites, said the first half had proven to be "resilient" against the backdrop of Covid-19. Revenues from ongoing business fell 3% in the six months to 30 September, to €821.4m, while underling earnings before interest, tax, deductibles and amortisation edged down 3% to €88.5m on the same basis.

The company said: "Our commercial waste division in the market leader in the Benelux, collecting and processing waste into product from almost every sector of the economy. It has therefore been inevitable that the measures taken by governments to manage Covid-19, especially in the first quarter, had a negative impact on volumes."

Volumes in the Netherlands and Belgium recovered in the second quarter, however, reaching 97% and 91% of the previous year’s volumes respectively. Total revenues in the division, the firm’s largest, fell 6% to €595.0m.

Chief executive Otto de Bont said: "We delivered a resilient performance in the first half, materially ahead of our Covid-19-adjusted expectations.

"The board remains cautious about the macroeconomic outlook, in particular any potential future slowdown in the later cycle Dutch construction market.

"Our resilient trading in the first half - included a period of extensive lockdown measures - allows us to anticipate a full-year performance which will materially ahead of our previous expectations."

Andrew Shepherd-Barron, analyst at Peel Hunt, said: "We already knew that second-quarter trading had been better than expected, but for the half term EBITDA to be down just 3% year-on-year, as now reported, is impressive. Costs were taken out, volumes were only slightly affected by Covid-19 in the Netherlands, and [hazardous waste treatment facility] ATM profitability made a start in its return to normal levels.

"We are upgrading our forecast for full-year EBITDA by 5%, to €175m, and pre-tax profit by 53%. We do not change our outer year forecasts but increasingly feel they look conservative."