Suez UK profits hit by ‘£12m’ loss from ‘major municipal collections contract’

This was put down to a £12m hit from an unnamed “major municipal collections contract”.

Suez explained that figures in the notes to the accounts show a reduction of £10.2 million from the contract, however, the initial commentary in the figures wasn’t updated, which is at £12m.

The results, posted on 12 October, cover Suez’s UK operations. The wider Suez Group posted revenues of €6.8 billion (£5.9bn) and earnings before tax of €1.4 billion in 2022 earlier this year (see letsrecycle.com story).

In the document last week, it was explained that operating profit, the money left after paying all business costs, but before paying tax, fell by 80% to £3.5 million.

This was “largely” down to “the creation of a loss making provision for £12m in relation to a major municipal collection contract.” Furthermore, “operational issues” at two of the company’s energy from waste plants in late 2022 resulted in “unplanned downtime for the facilities and higher disposal costs for the contractual waste”. The necessary maintenance work on these facilities was completed in 2022 and both plants were back on line before the year end, the report added.

Overall, Suez UK’s turnover was £764.7 million for 2022, up from £713 million the previous year, with profits for the year standing at £14.4 million.

Contract

While the loss making contract was not named in the report, it notes that Suez directors “expect that this provision will be utilised over the remaining 7 years of the contract”.

Contracts Suez holds which are due to end in 2029 include with Surrey county council for the beleaguered Eco Park, as well as with Aberdeen, and Somerset. There has been no confirmation if it is any of these three contracts, however.

In more positive news, the results show that Suez “achieved several key contract awards and renewals in 2022 across industrial collections and processing revenue streams”.

“Two significant municipal contracts with a combined annual revenue of circa £40m” were also awarded to the company, and will commence operations in 2023/24.

‘Positive’

John Scanlon, chief executive officer for Suez recycling and recovery UK, said: “During the 2022 financial year, SUEZ recycling and recovery UK delivered a positive and resilient financial performance, posting strong revenue growth. The company achieved several key contract awards and renewals, with two significant municipal contracts with a combined annual revenue of circa £40m awarded to the company, commencing operations in 2023/24. These results reflect the strength of our operations, commitment to our customers and the hard work of our people.

“Against a backdrop of economic uncertainty and the impacts of the COVID-19 pandemic, we delivered a robust set of results. Our return to the SUEZ Group also came at a pivotal time for the company, and enables us to continue to focus on development and growth in pursuit of the triple bottom line.”