Renewi starts new financial year in line with expectations
Waste-to-product company Renewi updated the market on its trading for the period since 1 April on Thursday, reporting that it had started the year in line with the board's expectations.
The London-listed firm said the performance of the commercial division continued the trends it outlined in its full-year results, with momentum from price increases and synergies “more than offsetting” cost inflation - particularly for burnable waste - and lower output prices for paper.
It said it was monitoring the longer-term impact, if any, of the recent extended unplanned shutdown of the AEB incinerator in Amsterdam, which would add further pressure to incinerator capacity in the Netherlands for the remainder of 2019.
The company, which was holding its annual general meeting later in the day, said in its hazardous waste division, tests of its soil inventories had progressed well.
“In our view, the results so far are good and we await confirmation from the regulators, with whom the dialogue remains constructive.
“We are upgrading our thermally treated soil production line in line with our waste-to-product strategy to further treat soil into secondary building materials; trial quantities of gravel, sand and dust are being sold to customers for evaluation.”
Renewi noted that it recently completed two small strategic investments in the Netherlands to acquire Rotie's food waste collection and depackaging activities, and to acquire a 32% stake in a mattress recycling company alongside the investment vehicle of IKEA.
The former added scale to the firm’s existing Orgaworld business, and the latter addressed an emerging market need, the board said.
“Both investments strengthen our position in downstream waste-to-product activities and are expected to deliver attractive returns.”
On 17 June, Renewi signed an agreement to sell its Canadian municipal business for up to CAD 107.5m to Convent Capital, the proceeds of which would be used to reduce the group's net debt and leverage ratio.
The process towards closing the transaction before the end of September remained on track, it said on Thursday, and it also reported that the disposal of its Reym industrial cleaning business was ongoing.
On 5 July, the company completed the subscription of a €75m green Belgian retail bond at a coupon of 3%, which would settle on 19 July, ahead of the €100m maturity on 30 July.
“This completes our conversion to becoming completely green funded from the bonds, the EU private placement, term loan and revolving credit facility,” the board said.
“The new issuance, combined with the €25m green EU private placement issued last December and the proceeds from our disposals, will ensure that the group has significant long-term headroom on its borrowing facilities.
“The board's expectations for the year ending 31 March 2020 remain unchanged.”