12th Nov 2024 11:58
(Alliance News) - Renewi PLC on Tuesday reported a decline in interim profit but said it still expects to meet market expectations for its full year.
In the six months that ended September 30, the Milton Keynes-based waste management company said revenue from continuing operations rose 3.6% to EUR874.5 million from EUR844.3 million the prior year.
However, pretax profit for the FTSE 250 firm fell 42% to EUR21.5 million from EUR37.0 million the previous year, driven by exceptional charges related to changes in the discount rate on long-term provisions.
Renewi noted that discount rates on long-term provisions are coupled to government bond yields which declined from March, resulting in a non-cash cost of EUR4.1 million.
Profit also was hurt by charges of EUR2.1 million throughout the period related to cost-cutting programmes 'simplify' and 'oneRenewi'. However, it added that now that 'simplify' is complete, it is generating annual savings of EUR15 million for 2025.
Renewi added that total exceptional items and non-trading items for the half-year represented a cost of EUR10.3 million compared with EUR6.3 million of credit the previous year.
Revenue growth was driven in part by pricing increases in its Commercial Waste division, which grew 2.5% to EUR710.7 million from EUR693.3 million, despite a decline in inbound volumes in both the Netherlands and Belgium.
Renewi blamed this volume decline to ongoing demand weakness.
Strong growth in its Specialities division also supported revenue performance, as the segment realised 19% growth over the period to EUR102.0 million from EUR85.9 million the previous year.
Renewi said it will propose a full-year dividend for financial year 2025 inline with its policy following its final results. That policy is to "deliver sustained real growth in the ordinary dividend". Renewi paid a final dividend of 5 cents per share for financial 2024, the company's first dividend since 2019.
It added that it was mindful of the macroeconomic challenges, but noted that its expectations for full-year underlying earnings before interest and tax remains in line with market expectations.
In the medium-term, Renewi is targeting high single-digit underlying Ebit margins, free cash flow conversion of over 40%, a return on capital employed of greater than 15%, and greater than 5% organic revenue growth.
Shares in Renewi were down 5.4% at 580.17 pence on Tuesday morning in London.
Renewi Chief Executive Otto de Bont said: "Our half-year results show tangible progress on our commitment to build a strong platform.
"The successful divestment of UK Municipal on October 10 2024 and the strong performance of Mineralz & Water, supported by strategic investments and actions over the last two years, have allowed us to move beyond our legacy challenges, positioning us for future growth."
By Christopher Ward, Alliance News reporter
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