Biffa boosted by ‘easing’ of HGV driver shortage

The trading update covers the 11 months to February 2022, and was posted ahead of Biffa’s 2021/22 financial year results later this year.

The trading update explained that group net revenues for the eleven months to February 2022 were 35% higher than the 2020/21 financial year, and 20% higher than the one before.

Excluding the Viridor and Simply Waste acquisitions, growth has been 25% and 10% higher respectively.

Whilst the board is mindful of the potential impacts of events in Ukraine, we remain confident

Ukraine

A spokesperson for the Biffa board said: “The board is pleased with the performance and underlying resilience of the business. Whilst the board is mindful of the potential impacts of events in Ukraine, we remain confident of the group’s position and reaffirm the group’s forecast for the current year”.

Volumes

Biffa’s industrial and commercial (I&C) division, which provides services in food manufacture and retail distribution, health and utilities, was the most severely impacted part of its business during the pandemic.

In May 2020, Biffa said this division was down 50% during the pandemic but had continued to serve customers providing “essential services such as food manufacture and retail and distribution”.

However, in the update this morning Biffa reported that I&C volumes (adjusted for acquisitions) have “stabilised slightly above pre-pandemic levels”. The waste management giant said it also offset cost inflation and supply chain challenges with price increases and other measures, “and the issue of shortage of HGV drivers has also eased in recent months”.

In specialist services, the industrial services business is performing strongly.

For the Company Shop Group, the surplus food resdtributor Biffa acquired in February 2021, trading “continued to be challenged”, but in recent weeks the company “started to see an improvement in both membership levels and gross margins”.

Infrastructure

Biffa added that the construction of its Newhurst and Protos energy from waste (EfW) plants remains on schedule.

Newhurst, the 350,000 tonnes per year capacity plant which Biffa is developing in partnership with Covanta, is expected to commence commissioning in late 2022, with commercial operations scheduled for early summer 2023.

Protos, which has a 400,000 tonne annual capacity, will follow around 12 months later. This is also being delivered with Covanta and Macquarie’s Green Investment Group.

On the plastics recycling front, Biffa says its Redcar rPET facility is expected to be operating at full pellet capacity in the new financial year, alongside the introduction of the UK Government’s Plastic Packaging Tax on 1 April.

Construction of the third rHDPE line in Redcar is underway and, is expected to be operational in FY24.

Strategic

Biffa added that the Simply Waste and Viridor acquisitions are both trading in line with expectations, with integration going to plan.