Biffa scrambles to offset China ban

Nevertheless, the group has been seeking alternative markets outside of China, while increasing prices on re-tendered recycling contracts. The financial impact of Beijing's move is difficult to gauge given it was only implemented in the first quarter of 2018. For now, however, a 10 per cent rise in adjusted operating profit to £81.2m and an accompanying 54 per cent hike in free cash flow, point to solid trading. 

The group highlighted the threat posed by dwindling landfill capacity in the UK, while advocating further expansion of domestic energy-from-waste (EfW) and recycling capabilities. While government intervention is needed to ease through planning consent for new landfill sites, Biffa has been working with US EfW group Covanta to assess sites in Cheshire and Leicestershire for the development of dedicated plants. Feasibility work is ongoing but the group isn't ready to announce a decision one way or the other.

Closer to home, cost management and an enthusiastic approach to acquisitions has led underlying operating margins to expand in the core industrial and commercial (I&C) division, reaching 8.4 per cent. The group plans to continue its acquisitive strategy, with I&C remaining the primary beneficiary. Despite being the market leader in this space, the group enjoys only 10 per cent market share, while the increasing burden on smaller waste management players to process different types of waste and mitigate commodity risk is making it harder to compete, thereby encouraging consolidation.

Analyst Numis left forecasts largely unchanged, and continues to expect adjusted pre-tax profits of £59.9m in FY2019, giving EPS of 19.2p (from £59.6m and 19.1p in 2018).