Biffa today reported half year results to 28 September 2018 (H1) with net revenue up 4.2% to £501.8m compared with the same period last year. Operating profit after tax fell marginally to £24.9m.
The company’s recently appointed chief executive Michael Topham has welcomed his first set of results since taking over from Ian Wakelin earlier this year.
Biffa has welcomed a “solid” set of results for the six months to November 2018
The results also come with an announcement from Biffa of a £15m PET plastic bottle recycling plant investment in Sunderland.
C&I
Mr Topham pointed to the strong performance in the company’s commercial and industrial (C&I) division following the release of its half year results to November. Speaking to letsrecycle.com, Biffa’s chief executive said he was pleased with the organic growth the business has seen in the division over the past six months.
The C&I division saw revenue jump by 7.9% from H1 2018 to £301.9m. Underlying operating profit was also up by 11.3% to £27.5m.
Organic revenue increased 3.1% with acquisitions contributing a further 4.8% to overall revenue growth, the results note.
Mr Topham said he was “delighted” with the progress the company has made in terms of acquisitions, pointing to the takeover of major waste and recycling business, Weir Waste Services, earlier this year (see letsrecycle.com story).
The company said it expects to see “year-on-year margin growth in this division”.
Municipal
However, the municipal side of the business proved somewhat more difficult during the period, with trading performance “impacted by a number of factors in a competitive market”.
Revenue in the municipal division fell by 4.6% to £83.4m. Meanwhile, underlying operating profit dropped by 57.1% to £2.1m compared to the same period last year. The result “reflects the expiry of the Stafford and Surrey Heath contracts in the prior period,” Biffa notes.
Operating profit was also impacted by contract attrition, unrecovered fuel and labour cost inflation and the performance of certain recently acquired contracts, the results reveal.
However, underlying performance “has now stabilised” with Biffa saying it is pleased to have recently been awarded a contract with Waverley borough council.
Performance
A strong performance is also noted in the resource recovery and treatment division by Biffa, given the China backdrop.
Net Revenue increased 7.6% to £65.4m, “albeit that Underlying EBITDA and Underlying Operating Profit were both impacted by the year on year commodity price movement”.
Biffa’s chief executive told letsrecycle.com he believed the company had “responded well to the changing recycling markets” caused by the Chinese restrictions.
And, in energy, the company remains fairly consistent with a revenue of £50.1m compared with £52.7m last year. This was due to “stronger wholesale energy and renewable subsidy prices which have partially offset the anticipated reductions in landfill gas generation,” Biffa says.
Strategy
In terms of strategy, Biffa has made four acquisitions over the past six months equating to £20m invested. As previously stated, these include the acquisition of Weir Waste Services Ltd in July 2018, which brought in £17.3m of annualised revenues.
And, discussions with Covanta concerning the potential development of two Energy Recovery facilities in Cheshire and Leicestershire “continue to make good progress”.
“We have made significant progress around both the financing structure and the commercial and operational contracts that will underpin these projects and we are progressing the revised permits that are needed to operate both sites at the planned capacities.”
“The key themes in the UK waste management industry remain collection market consolidation and development of infrastructure in recycling and energy from waste.”
Michael Topham
Biffa
Biffa also explained it is advancing a new PET plastic bottle recycling investment, which is expected to cost around £15m and “which will take around 18 months to build and commission”.
Mr Topham revealed that the company is eyeing a site in Sunderland, close to the company’s existing Wilton polymers site.
Biffa said it is considering potential joint venture parties to collaborate on the project if this is mutually beneficial.
‘Confidence’
Mr Topham also commented that he was pleased with the “continuing confidence” on investors in the business with an increase in dividend by around 6% from last year. The Board of directors announced an interim dividend of 2.3p per share.
“The key themes in the UK waste management industry remain collection market consolidation and development of infrastructure in recycling and energy from waste,” Mr Topham said. “Biffa remains well placed to capitalise on these and we look forward with confidence.”
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Source: letsrecycle.com General
