Renewi scraps dividend as Covid-19 impact looms
Renewi has scrapped its final dividend and begun cutting costs as the waste-to-product company prepares for the Covid-19 crisis to hit its business.
The company said it was confident that results for the year to the end of March would meet expectations. The commercial division has traded as expected and other units are in line or ahead of expectations, it said.
Renewi said volumes had started to reduce and that it expected business to deteriorate in the year beginning in April. It will reduce discretionary and capital spending, put employees in the Netherlands and Belgium on temporary leave and not pay the final dividend for the current year. The company said these actions would save more than €40m in 2020-21.
The company said: "We are monitoring the potential impact of coronavirus on the group. We expect a negative impact in the next financial year on waste volumes in the Benelux, but it is too early to assess the potential operational and financial consequences.
"Faced with coronavirus uncertainties and a potential resultant slowdown in the macro economy for the medium term, the board is adopting a prudent approach to planning and investment."
Renewi shares rose 2.6% to 23.05p at 10:02 GMT.
Core net debt, excluding IFRS16 is expected to be less than €500m at the end of March. The company has cash facilities of €695m and undraw facilities of €95m.
The Dutch government lifted a ban on thermally treated soil (TGG) in December, allowing TGG produced by Renewi's ATM facility to be used for industrial purposes in the Netherlands. Renewi said ATM was making encouraging progress and would increase production during the next financial year.
Renewi said governments had defined waste management as an essential service, allowing it to keep a full service during Covid-19 lockdowns. It said there were increasing opportunities to expand margins by diversifying further away from incineration and making secondary materials.