“Favourable recycling market dynamics” led to Viridor reporting an 18.3% increase in profit before tax in the half year April to September 2018, compared to the same period last year.
The figures came as part of the company’s half year results, which were released this morning, showing that an increase in revenues from Energy from Waste (EfW) facilities and landfill offset a fall in revenues from recycling and landfill gas.
As seen in the table below, earnings before interest, tax, depreciation and amortisation (EBITDA) from recycling are down more than 30% from the same period last year to £7.4 million. However, this represents a 69% rise from the £4.million recorded in the second half of 2017, brought on by the Chinese waste restrictions.
Discussing the results at a shareholder meeting this morning, Susan Davy, chief financial officer at the Pennon Group, the holding company for Viridor, said the “strong” results show that the company has recovered from tough market conditions at the end of last year.
“Compared to last year there is a reduction in recycling [EBITDA}, but the second half saw the China restrictions and if you compare this with the second half of last year, we have actually recovered, which is reflected in the figures. Quality is key as well, and I am pleased to say we are achieving good pricing, and margins have increased compared to the second half of last year.”
When touching on landfill, Ms Davy said that despite predicting volumes to drop, this has not been the case and compared to the previous period volumes have remained the same “and pricing is good in terms of the volumes coming in”.
The half-year results also reflected on Viridor’s EfW facilities and showed a 28.8% increase in EBITDA compared to the same period last year.
This was brought on by three facilities at Glasgow, Beddington and Dunbar, which the company says are all now processing waste.
“Optimisation is ongoing and operations will ramp up over the next 18 months as has previously occurred at the other ERFs in our portfolio,” the statement said.
Chris Loughlin, chief executive of the Pennon Group, added that the company is optimistic about both the results and the upcoming Waste Strategy.
“The focus for Viridor is UK recycling and residual waste processing and transformation. Waste market dynamics are favourable, with the ‘Blue Planet’ effect spurring action, and we are optimistic that positive changes will be announced in the Government’s Resources & Waste Strategy later this year enabling a UK recycling system fit for the future,” he explained.
Mr Loughlin added: “Progress continues bringing Viridor’s remaining four ERFs in the portfolio on stream, with three now in operational ramp up and the final facility under construction.”
Overall, the Pennon Group, which includes South West Water, recorded a 3% rise in revenues to £746 million compared to the first half of last year, recording a profit of £116.m after tax.