Renewi plc
Pre-close trading update
Renewi plc ("Renewi" or the "Group") (LSE: RWI.L: Euronext Amsterdam: RWI.AS), a leading European waste-to-product company, today provides an update on the Group’s performance for the year ended 31 March 2024 (“FY24”).
Overview
The Group has continued to deliver against the strategic priorities previously communicated at Renewi’s Capital Markets Day (“CMD”) in October 2023.The Group is anticipated to report FY24 results in line with current market expectations.[1] Strong performance in three out of four divisions was coupled with cost actions across the Group, amid a challenging operating environment for Commercial Waste Netherlands. Recyclate prices were largely stable through the second half.
Delivery against strategic objectives
Further optimisation of portfolio
Mineralz & Water continued its recovery, with overall performance being slightly ahead of the original recovery plan. Waterside operations demonstrated strong performance. On the soil side, the ramp-up initiated in Q2 continued to progress in line with expectations throughout the second half of the financial year. In Q4, end-of-waste status was granted for filler, in addition to the existing end-of-waste status for gravel. End-of-waste status for sand is currently under review by the authorities.
The strategic review of UK Municipal remains on track for announcement by 30 June 2024.
Stronger platform
As set out at the CMD, cost reduction and efficiency in both the short and longer term, remains a key focus for the Group. Renewi launched its Simplify programme in Q3, with the full targeted run-rate impact of €15m in SG&A costs reached in Q4, contributing to our medium term objective of delivering high single digit EBIT margins.
Additionally, during FY24, Renewi embarked on its Future Fit digital programme, a strategic initiative expected to increase operational efficiency, asset utilisation and customer satisfaction, also supporting the Group in achieving its medium-term margin ambitions.
In order to accelerate growth and increase efficiency, as of 1 May 2024 Renewi will streamline its senior leadership structure[2] and merge Commercial Waste Netherlands and Belgium under a single leader focused on delivering our strategic growth agenda. Mineralz & Water will become a part of our Specialities division[3].
Organic growth
Trading conditions for the Commercial Waste division remain mixed, with volumes stable in H2 versus H1. The Belgian operations benefitted from resilient demand and regulatory tailwinds, including the Vlarema8 enforcement in Flanders. In the Construction and Demolition sector of Commercial Waste Netherlands, volumes picked up slightly versus H1 but results remained impacted by the broader regional weakness. Against this backdrop, Renewi intensified its sales approach to small-to-medium sized enterprises and targeted sectors, showing promising initial results. During the period, the Group also announced its partnership with Vattenfall, a Swedish energy company. Vattenfall will purchase more than 7.5m m3 of green gas annually from Renewi organics. Renewi is expected to start supplying green gas in Q1 of FY25. The new hard plastics advanced sorting line in Acht, Netherlands was officially opened in Q4 and is expected to operate at 24,000 tonnes per year throughput as of FY25.
Within Specialities, Maltha demonstrated strong performance over the year. Coolrec also performed well with increased volumes over Q4, but continued to be impacted by low plastics prices. Following a successful contract win leveraging its refrigerator recycling expertise, Coolrec added a new and innovative waste stream to its recycling offering – electric boilers. An existing Coolrec site in the North of France will be expanded for the new line, with first volumes expected in Q4 FY25.
FY24 financial summary
Group revenue for FY24 will be slightly lower year-on-year, as expected, reflecting the mixed market backdrop and lower recyclate pricing. The benefit of ongoing cost reduction, digitisation, execution of strategic initiatives and strong momentum in several of the Group’s businesses is expected to result in an improved underlying EBIT margin performance in H2 versus H1. As a result, the Group is anticipated to report FY24 results in line with current market expectations.1
Cash performance was stronger in H2 as a result of working capital management actions, the sale of the Hemweg site in Amsterdam[4] and the postponement of the commissioning of an advanced sorting line in Puurs.
Core net debt[5] was €367m at 31 March 2024.
A modest dividend is expected to be paid out for FY24.