Profit increase of 8% heralds promising outlook for Cleanaway

In the UK, Cleanaway's sales were up by 41% to 488 million. This has been largely due to the acquisition of Serviceteam, a large player in the public sector that had several key refuse collection contracts, from the venture capitalist firm 3i in early 2001 (see letsrecycle.com story). The increase also reflected the benefit of new municipal contracts such as that in Medway, Kent.

Commenting on the results, Brambles’ chief executive officer, Sir CK Chow, said:
“Overall, while there remains much work to be done, we have made good solid progress and the performance of the Group is improving. Assuming no material adverse change in economic conditions, we look to the future increasingly confident of our ability to deliver sustainable growth.”

He added: “Cleanaway is expected to grow both organically and by acquisition.”

Cleanaway also has major operations in Germany, where the slow economy has limited profits as has the impact of lower paper prices in the first half of the year, and Australia, where a “significant increase in workers’ compensation costs” together with the one-off exit costs of an unprofitable municipal contract in Brisbane has had an unfavourable effect on profits.

As well as the acquisition of Serviceteam, Cleanaway's success in the UK has been put down to the building of new state-of-the-art facilities such as the materials reclamation facility in Rainham, Essex (see letsrecycle.com story), which now has contracts for more than 30,000 tonnes of waste a year.

Medway
New municipal contracts have also added to the strength of UK operations, such as the new 71 million contract for Medway Council in Kent, due to begin at the end of September 2002.

Medway Council have given Cleanaway a seven-year contract to handle rubbish collection, street cleaning, waste disposal and kerbside recycling collections of paper, cardboard and cans. The contract had previous been with SITA since 1995.

Cleanaway will also collect and compost garden waste, and will collect recyclables from schools and the council's 60 recycling sites. Steve Huxley, managing director of Cleanaway UK said: “The fact that we have the right recycling know-how and infrastructure in place will enable us to work closely with Medway Council on achieving their recycling targets.”

Although its technical waste business also continued to perform well, one side of Cleanaway that is faring less well is its landfill business, which is slightly down on last year because of “increased depreciation following a reassessment of the rate of site depletion”.

Looking ahead generally, a statement from the company said: “Cleanaway is operating in an industry in which legislation is increasingly shifting the value of the industry from disposal to the sorting, recycling and recovery of waste. These growth drivers apply both to Germany and the UK with further opportunities from municipal waste outsourcing. Cleanaway is well positioned to benefit from these opportunities.