Biffa has reported half year results to 27 September 2019 which showed net revenues up by 8.7% to £560 million and underlying operating profit (before exceptional items) up 8.3%.
Alongside the numbers issued today (13 November), the company revealed it has recently acquired the trade waste business of Ribbex UK (£2.5m value) and Kier (£0.2m). Biffa also this summer took on the glass routes operated by Thamesdown Recycling and purchased IWMS Wastecollection.com.
The company’s chief executive, Michael Topham described performance in the six months as “strong” with “notable performances” in its industrial and commercial and recycling segments.
At the start of the financial year Biffa streamlined its organisational structure to focus on two strategic areas, “collections” and “resources”. The Industrial & Commercial and Municipal divisions were merged with the Hazardous Waste subdivision to create a new Collections division, it explained. The Resource Recovery & Treatment division, excluding the Hazardous Waste subdivision, has been merged with the Energy division to create a new Resources & Energy division.
Biffa’s big performer was its industrial and commercial activities which showed growth of 9.6% from £280 million in the first half of 2018/19 to £307 million in the current first half (H1). The company highlighted a low churn of customers, major contract wins (such as Alpha ISG Skychefs) and also implemented “strong price management”.
Municipal revenues remain reduced although they were just over £3 milllion stronger than in the same six months last year. However, at £86.8 million this year’s first half, they remain about £11 million lower compared to the comparable figure for 2017/18.
However, Biffa said that its municipal performance has “stabilised… and during the period we successfully mobilised the East Sussex contract.” But, no new contract wins were announced in the results statement.
The company’s challenges on the materials exports front – which have seen it found guilty over illegal waste export charges – are referenced, as are an appeal and further charges which the company may face in the courts. It is explained that “We have also accommodated the fine and associated costs from the EA court case and made a further provision for the costs of our appeal and other pending cases within the H1 numbers.”
On the recycling front, strong positives are signalled from the company’s plastics recycling activities which showed a “particularly strong performance”.
Biffa stated: “We have a significant opportunity to grow our Biffa Polymers business, with strong demand for the closed loop food grade recycled plastic we produce. The construction of the £27.5m rPET plastic bottle recycling facility at Seaham is on budget and schedule and we are expecting the site to be operational at the start of FY21.”
The commodities markets are also referenced with the company saying it had recovered from the Chinese ban on the import of recyclables as well as having lower commodity exposure. Whether the picture will be the same on commodities for the second half of the year is uncertain, as since Biffa’s first half, the value of waste paper has slumped.
Organics activities were knocked by performance problems at its West Sussex Brockhurst Wood MBT plant and maintenance downtime at its Poplars anaerobic digestion plant in Cannock.
“Our future acquisition pipeline remains strong.”
Plans for energy from waste plants, which will see Biffa involved, are still proposed for Leicestershire (Newhurst Quary) and in Cheshire (Ince), but financial completion work is still awaited and appears to be taking longer than expected.
Mr Topham said: “”Biffa has delivered a strong performance in the first half of the year. Both of our operating divisions achieved their targets, with notable performances in our I&C and Recycling segments.
“In Collections we have continued to deliver a good level of organic growth, supplemented with four small acquisitions in the year to date. Our future acquisition pipeline remains strong.
“In Resources & Energy, our Recycling operations have seen good growth, and we have made further progress on our investment plans in Energy from Waste and plastics recycling.”
The chief executive said Biffa’s funding position remains strong “with sufficient liquidity and leverage headroom available to fulfil our growth investment plans. As a result of the sustained progress, and despite the uncertain political and economic environment, our full year expectations remain unchanged.”