Veolia’s chief operating officer, Estelle Brachlianoff, who was the company’s UK chief executive, has spelt out how the company is tackling the sharp fall in recovered paper prices to ensure profitability.
The details came as the company discussed the ‘limited’ impact of coronavirus on its business in China and set out plans to become ‘more selective’ in taking on municipal waste contracts during an open analysts/Veolia conference call last week (28 February).
Veolia is taking a ‘two-pronged approach’ to improve profitability in its paper division; invoicing for sorting and collection, and only looking for paper which has guaranteed end markets
The call was held to discuss the 2019 annual results of French multinational waste, water and energy giant Veolia Environment, which is Veolia UK’s parent company. A transcript was published by Yahoo finance this week.
Paper
During the briefing, analysts were told of “a very sharp decline in recycled paper prices with an impact of EUR 43 million in the fourth quarter alone” which “weighed on our business.”
Mrrs Brachlianoff noted that “the situation in the paper market is not good at all”, with prices having “collapsed, in particular, during Q4, which means that we’re totally refocusing the paper business”.
“The situation in the paper market is not good at all”
She explained that Veolia is taking a two-pronged approach to tackling the issue to improve its profitability.
“First of all, we bill the service and we work on the quality”, she explained. “Billing for the service means that, historically, the cost of collecting was more than covered by the fact that the raw material we were covering was worth a lot of money… This is no longer the case. So we now invoice for the sorting and the collection. And it’s a business model which is very different.
“The second thing is concerning the quality… And so we will be looking for paper which will have people who are interested in, who want to recycle it and others who don’t, quality or paper with no quality.”
Coronavirus
During the call, the company was quizzed about the impact of coronavirus on its Chinese operations and said this had been ‘limited’.
Despite a slight fall in waste volumes, the company reported no illness among its employees in the country, where it has a number of hazardous waste facilities, and said that its plants remained open.
Looking forward, Mrs Brachlianoff said the company would “have to factor in the coronavirus effect” but that 2020 had started well so far.
IMPACT 2023
In the course of the discussion, in which Veolia Environment reported “another year of solid growth”, the company set out a four-year strategy entitled IMPACT 2023.
Under the strategy, the company said it would “accelerate strongly” its activities in areas including plastics recycling, hazardous waste, the recovery of materials from organic waste and refuse-derived fuel (RDF).
The former Veolia UK chief executive, Estelle Brachlianoff, is now the parent company’s chief operating officer
Hazardous waste and plastic recycling activities helped drive Veolia’s international waste business to exceed the “exceed the EUR 10 billion mark”, in 2019, up 14% and 26% respectively year-on-year.
On the other end of the scale, Veolia said it was becoming more “selective” with regards to municipal waste contracts in the UK and elsewhere.
“This selectivity will affect our municipal waste collection activities if the waste collection can lead to waste treatment. It’s yes. When the contract pays us according to results or performance, it’s yes, not when it pays us solely on the basis of the resources and labour deployed. So this gives you an idea of the criteria that we will apply”, Ms Brachlianoff explained.
Plastics
Discussing plastics in detail, Mrs Brachlianoff said that Veolia’s ambition under the strategy is to more than double its revenue for plastic recycling.
Paper production at a Veolia site
She claimed there were “three types” of plastic recycling – mechanical sorting for higher grade material and RDF or chemical recycling for lower grade material, noting that the latter was “not yet a technically and economically proven model.”
“Veolia, as you know, has had a presence on this plastic market 4 or 5 years now. But in the last year or 2, things have seriously accelerate”, she explained, citing increasing public interest and legislation.
“That has resulted in major brands making a commitment to include a certain level of recycled content in their packaging. And Veolia is uniquely positioned to respond to this booming demand, not only due to our technical know-how but also because we have access to reserves of raw material, namely waste. This means that we have been able to sign strategic partnerships with big names such as Danone, Unilever and Nestle.”
Commercial
Elsewhere during the discussion, Veolia revealed a focus on digitalisation and said it was trialling an “Uber-like” waste collection service for commercial customers in Germany.
Veolia said it is ‘uniquely positioned’ to capitalise on ‘booming demand’ for recycled plastic in the UK (pictured: Veolia’s Dagenham plastics recycling plant)
The company explained: “Our clients can receive real-time data on their recycling rates for each site. In Germany, we are even testing the Uber of site waste collection, which is a system which puts site managers in touch with truck drivers.”
Related link
Transcript published by Yahoo finance/Reuters, available here.
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Source: letsrecycle.com Plastic
