Preliminary results published by the waste management company's parent firm, Pennon Group, show that Viridor's profit before interest, tax and amortisation of intangibles (PBITA) was £65.5 million for 2008/09, compared to £58.1 million – a rise of £7.4 million.
I am very positive about the long and short-term prospects for Viridor
Colin Drummond, chief executive, Viridor
At the same time, its revenue increased by 15% (or £67.6 million) from £455.1 million in 2007/08 to £522.7 million – of which £41.9 million came from its recent acquisitions, recycling company Grosvenor Waste Management and WEEE recycler Shore Recycling.
However, the results also revealed a 0.6 million tonne fall (11%) in the amount of waste the company landfilled – which the company said was “entirely due to a reduction in third party industrial and commercial volumes, particularly in the second half of the year”.
While recycling profits grew by 27% year-on-year, just 27% of that growth came in the second half of 2008/09, which the company said was “reflecting international price movements”.
Downturn
Speaking to letsrecycle.com about the results today, Viridor's chief executive, Colin Drummond, said: “It's been another good year for Viridor despite the economic downturn.”
“It's fundamentally waste and renewable energy is a great business to be in,” he added, explaining that the key reasons for the company's success were “UK PLC having to spend a lot of money meeting waste targets, waste is a low cost source of renewable energy,” and Viridor being “very strong” in landfill.
Mr Drummond acknowledged that the 13% growth in PBITA was “behind” the 22% average yearly growth the company had achieved since 2000/01, but claimed that “I couldn't think of a better sector of business to be in, particularly in the current business climate.”
He added: “I am very positive about the long and short-term prospects for Viridor.”
In particular, Mr Drummond was optimistic about prices for recyclables recovering and said: “We're seeing prices recovering, they we're very bad from November through to the Chinese New Year but since then they've been recovering, they're going back to historic levels.”
And, he said that the Greater Manchester waste PFI deal, which Viridor signed in April (see letsrecycle.com story), would also help the company's future profitability, explaining that “as with a number of these contracts, we're taking on a profitable business”.
Viridor is also currently in the final bidding stages for the Cheshire PFI and Oxfordshire PPP contracts, and Mr Drummond said the company was “hungry” to pursue other PFI deals.
Treatment
Mr Drummond also highlighted the company's moves into alternative treatment methods, and explained: “We're doing quite a lot in that we have been diversifying the business away from purely landfill.”
“On that front we increased our capacity for landfill gas and will see more profit growth in the coming years,” he added, with the results revealing that its landfill gas power generation increased by a further 6% to 504 gigawatt hours, while its average revenues per megawatt hour rose by 23% to £74.
The results reveal that this was due to the increase in ROC energy contract prices, with 62% of the company's power generating capacity eligible for ROCs subsidies.
And, Mr Drummond explained that the company had sold forward its outputs from renewable energy until March 2010 in May 2008, at a “satisfactory price”.
Pennon
For the Pennon Group overall, the preliminary results show an increase in both underlying operating profit (from £242.1 million to £259 million – a 7% increase) and revenue (from £875 million to £952.9 million – an 8.9% increase).
However, they also showed that, in terms of cash gained from its operations, Pennon's profits fell from £133.6 million to £91.5 million.
But, a spokesman for the company told letsrecycle.com that the “only reason” this fell was due to a change in the Group's deferred tax for the year – in 2007/08 it was credited £9 million, but in 2008/09 it was charged £36.9 million, with £24.9 million relating to changes in taxation legislation in 2008.
Ken Harvey, Pennon Group chairman, said: “We have seen further profitable growth in the Group this year. Our two key businesses, South West Water and Viridor, remain our focus and we are delivering the benefits of that strategy.
He added: “Viridor continues to deliver a strong performance based on both organic growth and sound acquisitions. The Greater Manchester PFI waste contract, with its associated renewable energy generation, is a further major step in the delivery of Viridor's successful strategy.”
Register for free to comment