And, the company said its position in the UK should see it well-placed to benefit from the expected trend towards the recycling of waste. But, the company's technical waste division remains under pressure.
Cleanaway's turnover reached the 1 billion mark in the 12-month period up to June 30, increasing from 964 million to 1,037 million. However, operating profits fell by about 10% – down from 96 million to 89 million – which the company said was “as expected”. The company said 4 million of the 7 million drop in profits was caused by increased pension costs in the UK.
But, the company said its profits in the second half of the year were up 3 million on the first half, mainly because of “significantly improved results in the UK”.
Cleanaway, which operates in Germany, Australia, New Zealand and Asia as well as the UK, had a healthy cash flow but incurred 9 million in restructuring costs in its German – and to a lesser extent UK – operations.
The company's restructuring would bring incremental benefits to the UK, its statement said, and would offset the difficulties faced in Germany through the re-tendering of contracts with packaging waste recycling organisation DSD.
In the UK, Cleanaway's sales were up by 6% over the year to 467 million. Profits remained the same as the equivalent period in 2002/03, however, mainly because of the increased pension contributions.
Municipal
Cleanaway's UK municipal waste business “continued to show strong growth”, helped along by the start of the company's Croydon waste collection and street cleaning contract now thought to be worth 91 million over its seven years (see letsrecycle.com story).
Contract extensions with Tower Hamlets and Lambeth as well as a CA site contract for Essex have also strengthened Cleanway's municipal arm. The company said in 2004, it achieved a 50% success rate on tenders, and its order book at the end of June stood at 776 million.
Commercial
Cleanaway's commercial and industrial arm for the UK “remained under pressure in a competitive market” in 2003/04. The company said improvements were made in the second half of the year through price increases and a focus on improving the profitability of individual customer accounts.
The company said its customer service improved in the commercial sector, with the number of missed collections “reducing significantly”. New contracts included one with the Compass Group.
The technical waste arm of Cleanaway, which is now being subsumed into the new Recycling and Disposal Services division, was “impacted by depressed conditions in the pharmaceutical and chemical industries”, the company reported.
Outlook
Looking ahead to the future, market growth is expected because of the requirements of the Landfill Directive, and Cleanway said its expertise should position it to benefit from the increase in the recycling of waste. The company's new 7 million materials recycling facility at Greenwich (see letsrecycle.com story) should start operations in December 2004.
Cleanaway said it expects its restructuring to help provide improvements in the UK operation “across all business segments”.
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