Viridor sees half year profits fall by 28.8%

Waste management firm Viridor saw its profits before tax decrease by 28.8% during the first half of 2013/14 falling to 15.3 million but the company says that the performance is in line with its expectations for the year.

In its half year financial report on the six months up to September 30, Pennon Group, which owns Taunton-based Viridor as well as South West Water, revealed that overall revenue was up 5.3% for the waste firm rising to 398.2 million.

However, revenues from recycling decreased by 5.5 million despite a 4% increase in the volume of recycled materials traded by the company to 974,000 tonnes, compared to the same period during the previous year.

Overall average revenues per tonne from recyclate sales and gate fees for the half year fell to 93, 9.4% lower than for the first half of 2012/13 and 6.1% lower than for the last six months of the year.

But, the company claims that recyclate prices have stabilised for most commodities, despite remaining under pressure, and it has taken steps to reduce its cost base as well as focusing on the development of high quality recyclate, through investments in new technology such as a plastic separation plant at Rochester.

Earnings

Meanwhile, Viridors earnings before interest, tax, depreciation and amortisation (EBITDA) for the half year decreased by 3.5m (7.8%) to 41.4m, while profit before interest and tax (PBIT) fell 3.0m (14.3%) to 18.0m.

Commenting on the results, Ken Harvey, Pennon Group chairman, said: I am pleased to report that financial performance at Viridor in the first half of this year has been in line with management expectations. As previously stated this will be a transitional year for Viridor and the company expects PBIT plus joint ventures in 2013/14 to be broadly similar to 2012/13.

Cost reductions are delivering an improvement in recycling margins per tonne compared with the second half of 2012/13, offsetting the trend decline in landfill. Viridor has continued to make strong progress on building its EfW business and securing base-load contracts. These projects are expected to drive the companys long term profit growth.

The results also highlight Viridors development of energy from waste (EfW) capacity, with 148MW of energy generation currently online through landfill gas, Lakeside and Bolton EfWs and its Greater Manchester anaerobic digestion (AD) operations. The company expects to have the capacity to treat at least two million tonnes constructed and operational by the end of 2015/16.

Five plants, being Runcorn I and II, Exeter, Ardley (Oxfordshire) and Cardiff, have reached advanced stages of build with all expected to burn waste and come on-stream in financial year 2014/15. Two others, Glasgow and Peterborough, commenced construction in the period.