Half Year Results for the six months ended 30 September 2024
Renewi plc (“Renewi”, the “Company” or, together with its subsidiaries, the “Group”) (LSE: RWI, AMS: RWI), the leading European waste-to-product business, announces its results for the six months ended 30 September 2024 (“HY25” or the “Period”).
Financial highlights1
• Revenue from continuing operations up 4% to €874.5m (HY24: €844.3m), mainly driven by pricing in Commercial Waste and strong growth in Specialities
• Underlying EBIT from continuing operations up 9% to €53.2m (HY24: €49.0m), driven by successful turn-around in Mineralz & Water (“M&W”) and benefits from Group margin improvement programmes. Underlying EBIT margin increased to 6.1% from 5.8% last year
• Statutory profit after tax of €10.2m (HY24: €35.3m) due to non-cash impact ofchanges in discount rates for long-term provisions and the loss for the period from discontinued operations
• Free cash flow improved to €20.3m including UK Municipal largely driven by underlying EBITDA growth and working capital improvements
Strategic & Operational Highlights
• Portfolio restructuring executed: Fundamentally improved risk and cash generation profile. UK Municipal divestment completed on 10 October 2024, which will improve margins and free cashflow generation, and the M&W turn-around is on schedule realising double digit underlying EBIT margin
• Successful cost and efficiency measures: Reduced SG&A costs by €15M in FY24 and further incremental savings identified. Measures are being implemented to simplify our organisational structure, standardise and digitise our operations to drive efficiency, asset utilisation and customer satisfaction
• Organic growth: 4% revenue growth achieved driven by pricing in Commercial Waste and strong growth in Specialities despite a challenging market backdrop
• Commercial Waste: Realised 3% revenue growth in Commercial Waste despite continuing subdued volumes across certain market segments, reflecting the economic backdrop. Inbound price increases were implemented to offset additional handling cost of inbound waste due to previously outlined incinerator capacity issues
• Mineralz & Water: Strong performance, resulting in double digit underlying EBIT margins driven by higher year on year volume in soil and water treatment activities as well as lower utility costs and secondary building materials gaining momentum
• Specialities: Continued strong performance, with revenues increasing 19% and underlying EBIT growing 10%, benefiting from previous operational enhancements, pricing and strong volume intake at Coolrec
• Recyclate prices: Generally stable in the Period, with paper price increases and wood prices decreasing
• Recycling rate from continuing operations: Improved slightly over the Period to 66.2% (63.8% including UK Municipal) from 65.4% at FY24 (63.2% including UK Municipal).
Outlook
• Expectations for FY25 underlying EBIT from continuing operations unchanged
• FY25 dividend to be proposed after full year results in line with dividend policy
• Medium-term targets of high single digit underlying EBIT margins, Free Cash Flow/EBITDA conversion >40%, ROCE of >15% and >5% organic revenue growth are unchanged and on track.
Strengthened platform capable of accelerating strategic delivery
During the Period we have reached an important milestone in the transformation of the Group, as we are demonstrating delivery across the key enablers of our longer term strategic objectives:
• Structurally underperforming business units now exited or remediated;
• Ongoing net margin enhancement programmes embedded in the businesses; and
• Return to free cash flow generation.
Our strengthened platform supports the commitments made at the 2023 Capital Markets Day.
Portfolio optimisation
On 10 October 2024, shortly after the Period end, Renewi completed the sale of its UK Municipal activities to Biffa. The completion of this divestment de-risks Renewi's balance sheet and immediately improves both cash flow and underlying EBIT margin.
The focus on producing secondary building materials has paid off and resulted in strong financial performance of the M&W division realising an underlying EBIT of €8.8 million, a 5x increase versus last year.
Stronger platform
The Group launched and completed a cost-cutting programme in FY24 to streamline staff functions and reduce overhead costs, which is now generating annual SG&A savings of €15 million. Further initiatives have been launched and are to be implemented during the second half of FY25, focusing on building logistics, processing and engineering capabilities as well as standardisation in preparation for the Future Fit digitisation programme.
Renewi is committed to creating a more efficient operating model. To this end, Renewi has conducted initial site reviews, categorising locations into Processing and Logistics sites. Over the period, the Company has closed low-yielding sites, including Tisselt and Mijdrecht, and streamlined operations by reducing its fleet of trucks by approximately 50 vehicles or 3.2% of our total fleet.
The Company is also making significant strides in improving working capital management, particularly in data cleaning, unbilled revenue, and accounts receivable, resulting in a €47 million trade receivables improvement versus March 2024. Initial steps towards working capital management standardisation and process enhancement have been initiated, which will be embedded in the subsequent digitisation programme.