Biffa today reported half year results to 22 September 2017 (H1) with net revenue up 7.8% and operating profit up 9.3% compared to the same period last year.
The figures were described by Ian Wakelin, chief executive of Biffa, as “reflecting a strong performance in the first half of this year, during which we have continued to deliver on our acquisitive and organic growth strategy.”
Biffa’s I&C division has reported a ‘strong performance’ in H1 2017/18
And, stockbrokers also appeared to consider the figures a strong performance. JP Morgan Cazenove said: “Biffa has achieved what we regard as a strong first-half performance with adjusted EBITDA of £76.3 million, up 7% y/y, 1% above our estimate.”
While margins were squeezed in the company’s Municipal division, performance in the Industrial and Commercial sector was stronger with revenue growth of 7.4% to £280.7m. The company also highlighted less ‘churn’ of SME customers and corporate customer wins included Arcadia and Kerry Foods.
Overall margins in the traditionally fierce I&C sector were up 0.6% to 8.8% in H1, April to September 18 compared to H1 2016/17.
Municipal
In the local authority sector, H1 2017/18 appears to have been a trickier period than I&C for Biffa, with the company describing performance as satisfactory “in a competitive market”. This was meaning that margins on new contracts were lower. Organic growth was 2.9% and this excludes the absorption of the former Cory municipal work into the business.
Biffa has two other divisions: Resource Recovery & Treatment and Energy.
Strong landfill volumes and prices boosted performance in the resource recovery & treatment work and are set to mitigate against challenging recycling markets, in particular China, explained the company.
Energy margins were down with landfill gas volumes reduced but the main impact was less income from the West Sussex contract.
‘Market leading’
Commenting further on the figures, Mr Wakelin said: “Biffa maintains its market leading position as a fully integrated waste management specialist, and is well placed to leverage its scale and presence both to consolidate a fragmented market place and to further drive shareholder value by continuing to optimise and grow our existing operations.
Arcadia, which includes Topshop, is one of the latest accounts to have been secured by Biffa
“Looking ahead, we see attractive growth opportunities, including a healthy pipeline of acquisitions, of a range of sizes. We also have scope to continue to develop our infrastructure and services, taking advantage of the significant amount of waste we control. We look forward to reporting on the progress made in our EfW feasibility assessments when we announce our full year results.”
Over the next six months, Biffa expects to progress its Covanta EfW partnership as well as exploring further opportunities in plastics investigate further opportunities in plastics recycling.
Hazardous
Biffa also commented on the latest developments concerning the company and HMRC over the landfill tax treatment of hazardous soils. The company said that HMRC disagreed with its treatment of the soils. This could have a tax implication for the company of £9.2m and relates to the period 2012-2015 only with no exposure outside of this period.
And, Biffa noted that it has “very strong legal advice supporting its position and will vigorously defend its position”.
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Source: letsrecycle.com Waste Managment
