An increase in energy revenue for Veolia has offset the losses caused by the decline in recycled material prices as a result of the Chinese waste restrictions.
And, the company does not expect the situation in terms of weak market prices to deteriorate further, with the hope of more stable markets.
French-headquartered Veolia said today that it hoped the markets situation would stabilise
Paris-based Veolia released its Q1 (January-March 2018) group figures this week, which showed a 5.5% like for like increase in revenue, its sixth quarter in a row of “strong growth”.
In the UK, Veolia operates across waste, water and energy sectors and is a major player in the industrial local government sector including running a number of energy from waste plants.
The figures revealed the decline in recycled material prices, which Veolia said led to an average 20% reduction in selling price.
According to the company, this reduction in revenue was more than offset by the increase in energy prices, which generated 70 million Euros, partly boosted by a cold winter.
Veolia’s chief financial officer, Philippe Capron stated that the overall EBITDA (Earnings before interest, taxes, depreciation, and amortization) impact in Q1 for paper was 5 million Euros.
The overall revenue impact for paper was 26 million Euros, with the difference put down to “a lot of pass through activity in this field”. The figures were not split down to show the impact on the UK specifically.
Materials market
When quizzed on whether the company is concerned for the rest of the year, considering the increase in fuel revenue is largely seasonal, Mr Capron said while he can’t say for sure, he hopes to see recovery in the materials market.
“We have some hope that the situation will at least stabilise”
Philippe Capron
Veolia
“If I knew the answer I would be a commodity expert and making a lot of money! It is probable that commodity prices, especially paper and plastic, won’t immediately recover, even though we have some signals that for high quality materials the Chinese ban is being relaxed.” Mr Capron said.
He continued: “We have some hope that the situation will at least stabilise and we won’t have the inventory effect on the paper we buy and sell anymore, so that we probably should not see the situation deteriorate further.”
‘Restabilising’
Mr Capron further explained his outlook on the recycling market, when breaking down the waste revenue of the company.
He explained that the vast majority (84%) of its waste revenue comes from sorting and recycling services, and while the impact is limited, he thinks it will be short-lived.
“The impact has been significant, we are all aware of that. We are not exactly sure when the market will re-stabilise but obviously it will. The situation will create new recycling activities in Europe and therefore we are very confident the market will end up restabilising.”
UK overall revenue
In the United Kingdom/Ireland zone, revenue increased 4.0% at constant exchange rates to 518.2 million Euros, due to an increase in electricity tariffs, good PFI availability and industrial service contract wins, the financial results said.
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Source: letsrecycle.com Waste Managment
