And, Shanks Group has also posted a pre-trading update suggesting its municipal division has made ‘good progress’ over the first half of the year.
Both waste management firms published their updates ahead of interim results for the first half of 2015/16 that will be released in November.
Pennon Group has confirmed it is ‘increasingly well positioned’ for the future as more Viridor energy recovery facilities continue to come on stream.
The company is currently focusing on the completion of three EfWs in the UK: Peterborough, which is due to begin operations early next year, Glasgow in late 2016 and Dunbar in early 2018.
Construction of the Beddington EfW in South London is also due to start following an unsuccessful challenge to the build, with operations anticipated to begin in 2018/19.
‘Significant’
In total, Pennon expects Viridor’s EfW operations to contribute ‘significantly’ to its overall business, and is estimated to generate around £100 million to the waste firm’s earnings before interest, tax, depreciation and amortisation (EBITDA) in 2016/17.
The company notes that recycling EBITDA has also improved on the second half of 2014/15, which saw revenue generated from the market drop £30 million on the previous year (see letsrecycle.com story).
This Pennon claims is the result of Viridor’s ongoing Input, Throughput and Output Optimisation programme – which is ‘addressing the effectiveness and efficiency of operations and is yielding financial benefits’.
However, the firm concedes that pressure on commodity prices has continued. The government’s decision to remove the climate change levy exemption for renewables – which it has been receiving for EfW and landfill gas businesses – has also had a ‘modest impact’ on Viridor’s earnings.
Shanks
Shanks Group has meanwhile stated it its trading ‘in line with the Board’s expectations’ with recycling market conditions in the Netherlands continuing to show signs of improvement.
In the UK, Shanks’ municipal division has also benefited from its Barnsely, Doncaster & Rotherham (BDR) contract entering full service in July 2015 (see letsrecycle.com story).
However, the ‘recent bankruptcy of a major supplier’ to its Wakefield facility has led to an ‘unavoidable’ four month delay to full service commencement. The delay is anticipated to cost a one-off £5 million hit to Shanks’ second half trading profit.
Net debt at the end of September 2015 is anticipated to be in line with the firm’s expectations at below £200 million.
Shanks will release its interim six month results on November 5, with the Pennon results to follow on November 27.
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