Biffa ‘cautiously optimistic’ following results

The chief financial officer of Biffa, Richard Pike, has said the company is “cautiously optimistic” of a quick return to profitability, after posting a £40.5 million loss after tax for the 52 weeks to 26 March 2021.

Richard Pike, Biffa’s CFO, was speaking at a webcast this morning (1 June)

In a webcast this morning announcing the results, Mr Pike explained that growth in the second half of the financial year suggests the company is in a strong position for recovery after the initial impact of the Covid-19 pandemic.

However, he said the withdrawal of furlough support and rate reliefs — still relied upon by “large parts of the business” — could impact the company’s recovery, with clarity on this issue not expected for “quite some time”.

Revenues

Biffa revenues fell by £121.1 million in the year to £1.042 billion, a 10.4% reduction (see letsrecycle.com story).

Mr Pike explained that £100 million of this fall came from the collections division, with a fall in commercial waste volumes of more than 50% contributing to this.

He said: “Despite this, adjusted EBITDA [earnings before interest, taxes, depreciation, and amortisation] was only down by around £16 million as a result of the self-help measures we took and the efficiencies we drove into the business.

“In addition, there are other positives which position us well next year. We’ve had another strong period of contract wins, we’ve driven various areas of innovation forward.

“For municipal, we didn’t miss a heartbeat for service despite shielding requirements for some staff.  On the back of new contract wins and exiting the North Somerset loss-making contract, we are again very well placed for the next financial year.”

Mr Pike also pointed to how waste volumes have risen to close to pre-pandemic levels. He said: “As of last week, waste volumes rose to 99% of pre-pandemic levels.

“I don’t want to downplay the impact the pandemic has had, but we are cautiously optimistic.”

Richard Pike, Biffa

“I don’t want to downplay the impact the pandemic has had, but we are cautiously optimistic. Whilst it is pleasing to see we have yet to see the removal of furlough support and rate reliefs, both of which are being relied upon by large proportions of our business, and we won’t get clarity on that for quite some time.”

Strategic delivery

Following on from Mr Pike was Michael Topham, chief executive of Biffa, who outlined how the company had continued its strategic delivery across its four key areas (reduce, recycle, recovery and collection).

He said despite the challenges the company has continued to deliver on this front. He said the Company Shop Group, which the company acquired last year, delivers on its waste reduction objectives and has been performing in line with expectations so far.

Mr Topham added that the company has invested £65 million into investment in its recycling facilities and £75 million into the two energy recovery facilities, which are on track.

Along with the acquisitions of parts of Viridor (see letsrecycle.com story) and Ward Recycling’s compaction services business (see letsrecycle.com story), the company has invested £425 million in its key areas, Mr Topham said.

Michael Topham, Biffa’s chief executive

He added: “We did all of this during a pandemic, which we are really pleased about. We’re proud of how the team has responded and what we’ve managed to achieve despite the pandemic. If we had been offered these result in late March last year we would have taken them in a heartbeat. It feels like we are well placed, we won’t be complacent but we’re optimistic we have the right platform for growth.”

Looking forward, Mr Topham said there is “unlikely” to be any more acquisitions in the collections division until the integration of Viridor is completed. He said the company is also well positioned to deliver on consistent collection regulations coming up, and said the company is looking into investment in the recycling of plastic film, though said this is at the “very early stages”.

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