Viridor sees recyclate and landfill prices fall

A 6.1% fall in recyclate prices over the course of 2013/14 has seen profits decrease by as much as 19.5% at waste management firm Viridor, according to preliminary financial results published by its parent company Pennon Group today (June 3).

The results, which cover the financial year ended March 31 2014, show that the volume of recyclable material traded by the firm fell by 3% to 1.8 million tonnes across the year, with the overall average revenues per tonne from recyclate sales and gate fees for the year falling to 93 per tonne from around 98 per tonne in 2012/13.

Meanwhile, Pennon Group also claims that landfill gate fees have fallen over the same period, down 9% to 23.06 per tonne, while costs rose 19.4% to 21.90 per tonne as a result of higher provisioning. Pennon expects this trend to continue and has set aside 42.9 million for the write-down of its landfill assets.

In total, the companys recycling revenue decreasd 17.1m due to lower prices, but landfill revenue was up 43.1m due to higher landfill tax.

Viridor has said that it remains cautious on the prospects for recyclate prices, and is seeking to reduce costs as well as investing in new technology to enhance material quality including its plastics sorting plant in Rochester, Kent and the glass processing plant at Newhouse, Lanarkshire.

Energy from Waste

The company also has a number of energy from waste projects operational and in development, and expects to have as much as 15% of the share of the energy from waste market in the UK by 2020.

Viridors facilities at Runcorn, Exeter, Ardley and Cardiff have all reached advanced stages of build and the company expects all of these to come on stream in 2014/15. Facilities at Glasgow and Peterborough began construction during 2013/14.

Overall, the firms profit before tax and exceptional charges decreased 6.7 million (19.5%) to 27.6 million.

Commenting on the results, Ken Harvey, chairman of Pennon Group, said: Financial performance at Viridor before exceptional items has been in line with management expectations. Notwithstanding the difficult trading conditions, Viridors operating contribution is slightly ahead of last year and PBIT plus joint ventures is broadly similar to last year.

The company has made excellent progress in establishing its Energy from Waste (EfW) business which will transform Viridor into a leading player in the UK renewable energy sector. The EfW contracts and projects already contribute to Viridors bottom line and reflect the realisation of a strategy which is expected to contribute circa 100m to Viridors EBITDA within the next three years.

Pennon Group, which also owns South West Water, registered a profit before tax of 207.3 million during 2013/14.