For waste-to-product business Renewi (RWI), addressing net debt remains a top priority. An initial €57m (£49m) payment from divesting the Canadian municipal business helped reduce ‘core net debt’ (which excludes lease liabilities and public-private partnership borrowings) by 7 per cent to €514m. Proceeds received after the period end from divesting industrial cleaning business Reym should bring this down further. But the loss on sale has been booked as an exceptional charge, pushing the group into a pre-tax loss.
Revenue from commercial waste rose by 5 per cent to €618m, accounting for more than two-thirds of sales. Stronger input pricing offset ongoing recyclate pricing pressure as well as lower waste volumes, particularly from construction. These challenges are expected continue in the second half.
Although underlying operating profit from hazardous waste rose by two-fifths to €8.3m, this was helped by Reym no longer being depreciated as an asset held for sale. Amid the ongoing suspension of soil shipments from the Netherlands, revenue from the ATM division’s soil line dropped 44 per cent. With testing of its soil stocks now complete, the group is awaiting regulatory approval to reopen the market. Alongside scaling up capacity to manufacture new building materials, Peel Hunt estimates that ATM could add €4m in operating profit in 2021.
House broker Peel Hunt expects adjusted pre-tax profit of €41m and EPS of 3.9¢ for the full year, rising to €54m and 5.1¢ in 2021.
| RENEWI (RWI) | ||||
| ORD PRICE: | 30p | MARKET VALUE: | £ 239m | |
| TOUCH: | 29.8-30p | 12-MONTH HIGH: | 55p | LOW: 19p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | NA | |
| NET ASSET VALUE: | 35¢* | NET DEBT: | 209%** | |
| Half-year to 30 Sep | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 (Restated) | 891 | 21.8 | 2.4 | 0.95 |
| 2019 | 916 | -17.8 | -2.4 | 0.45 |
| % change | +3 | - | - | -53 |
| Ex-div: | 28 Nov | |||
| Payment: | 10 Jan | |||
| £1 = €1.16 *Includes intangible assets of €602m (£519m) or 75¢ a share | ||||
| **Excludes €183m in lease liabilities | ||||
