Renewi Share Discussion Threads

[outsizeclothes.com] 12/11/2024 17:48

I see absolutely nothing in these results and management comments to justify their refusal to let shareholders know of the bid.
I see a drawn out process of ifs, buts and maybe's that MIGHT increase shareholder value, BUT NO ABSOLUTE CERTAINTY that this can be done in any short to medium term time frame.

With our current debt levels, and with Global interest rate cuts on pause because of Trump, there's potential that the next bond roll-over could come at 1.5% - 2% higher than the nice rate we are currently paying on our "Green Bonds"

Greedy and/or deluded management really let us shareholders down with regard to the bid.
I wonder what sort of a pittance they'll throw us as a "crumb to the beggars" dividend ?
8p - for a huge 1.2% yield ???

[elsa7878] 12/11/2024 14:09

A bid will never come in when the company is trading at 700/600p as the premium would be too small(given they rejected 50% uplift). So that takeover premium is slowly disappearing from the share price and its now trading at its fundamentals which are ok but not great.

I would argue that the business is in much better, more focused shape. Just need economic activity to pick up in terms of higher volumes.

Takeover. Like Wood Group (!) they will be given a chance to prove themselves, if not a buyer will be back. There are few of these listed ESG (compliant) assets around.

[elsa7878] 12/11/2024 14:06

Excellent - thanks

[george stobart] 12/11/2024 13:25

Questions And Answers (Q&A) from today's 12 Nov Sell-Side broker call

Operator

We're going to ask you guys to unmute yourself. So Andrew Nussey from Peel Hunt. Can you unmute yourself and ask your question, please?

Q - Andrew Nussey{BIO 1944065 }
Yeah, good morning. A couple of questions from me, please. First of all, if we look at Commercial Waste and I guess more of a modeling point here, what are your expectations in terms of any one-off benefits in the second half that we should consider? Second question in Mineralz & Water, obviously the EUR20 million goal '26. Can you help us just a little bit in terms of what the journey might be now in terms of volume, price?

And also you've hit the September the sort of 10% margin in this set of results. And lastly, a bit of a sort of high-level question, recycling rate sort of 66%. If we look over the medium term, what should that look like? And equally, the sensitivity then to profit by increasing that recycling rate. Thank you.

A - Annemieke den Otter{BIO 19604513 }
Thank you, Andrew. Let me take the first question. In terms of one offs, we tend to not model these, but I think in general, there are always some pluses and minuses at the year end. So maybe a couple of million, but I would not sort of put a big number there, to be honest.

A - Otto de Bont{BIO 20143505 }
Yeah. So on your second question, Andrew, Mineralz & Water, the focus has been on improving our quality so that we can sell our sand and gravel to the concrete industry. And we have seen in the first half that our quality now is good enough, although we can further improve it, but our sales is starting to increase. And that will allow us to also start increasing the incoming volumes, because for the last years, we have put a hold on those incoming volumes, because at the end, we needed to make sure we can also sell them at the back end.

So the team, the sales team of Mineralz & Water is truly focused now on starting to increase the pipeline for projects for incoming volumes. And we expect over the next years to see a gradual improvement of volume that can grow, I would say, 5% to 10% per year as a minimum. On the profitability, I think the 10% EBIT margin that we have reached is pretty much, I think, what we would like to keep it at. It can potentially go a little bit higher, but for your modeling, I would suggest to keep it there and really focus on the volume.

And then, I think, thirdly, you were asking about the recycling rate. It is true that now we have a recycling rate of around 66%. We still have the ambition as Renewi in the long term to get to 75% that we communicated a few years ago. Recycling rate is determined by several factors. One is, of course, as we turn more of waste streams that go to incineration into recyclers that will help our recycler rate. And that's what we are focused on. And we expect every year you can add one to 2% of recycling rate as we continue.

However, what we've also noticed over the last two years is that recycling rate is impacted by the mix of incoming waste streams. And what we have seen, as you may recall, is that because the construction and demolition market where we have a high recycling rate was subdued over the last years, that has impacted our overall recycling rate. So that mixed effect is more difficult to predict, certainly in the long term, because it's depending on market conditions and market developments.

But overall, our ambition to grow our recycling rate stands and we will continue to focus on that moving forward.

Q - Andrew Nussey{BIO 1944065 }
All right. Thank you.

A - Otto de Bont{BIO 20143505 }
You're welcome.

Operator
Juan Rodriguez from Kepler Cheuvreux has a question. Juan, can you unmute yourself, please?

Q - Juan CamiloRodriguez
Hi. Yes. Thank you. Good morning. Thank you for taking our questions. I have two on my side, if I may. The first one is on guidance because you signaled that you expect to reach the consensus expectations at the EBIT level. Can you please let us know or give us one call on the EPS level, how you see the EUR0.7 per share that I see at the consensus level? That would be the first.

And the second one is on price signals or price increases that you signal. If I'm not mistaken, you signaled two more coming, one in October and one in January. If that is the case, what is the level of price increases that you're expecting on that? And have you seen any impact on your market share of these price effects that you've been putting on customers? Thanks.

A - Annemieke den Otter{BIO 19604513 }
Sure. Thank you, Juan. I have two questions, but I'll try to answer them all. I think your first question helped me there a bit.

Q - Juan CamiloRodriguez
Guidance.

A - Annemieke den Otter{BIO 19604513 }
Yeah. Guidance. I think what we're saying is we are comfortable with consensus, but it's important to understand that the current consensus still includes the UK Muni. So we are comfortable with that. But of course, if you do like-for-like, you need to make sure that you also take into account a couple of million, say, EUR2 million to EUR3 million that normally UK Muni would also contribute.

But in general, we are, as I said, we are comfortable with consensus. I think when it comes to EPS, the EPS will simply, especially when you look at the normalized EPS, will simply flow through from EBIT as it does for the half year. So you can extrapolate that when you look at the EBIT consensus, you can extrapolate say the normalized underlying earnings per share.

I think what is important is that, of course, the discount rate mark-to-market we have to do always at half year and full year does impact the statutory EPS. So of course, we had a big plus last year. We have now a small minus this year. It's a non-cash impact because we basically have to mark-to-market according to IFRS, our long-term provisions at half year and full year. So that's what you see for statutory. But underlying, it will simply flow through from the EBIT consensus.

Comes to pricing, yeah, I think I referenced the 1st of October and the 1st of January, we generally do not comment on how much price increase we push through for obvious also for competitive reasons. But what we do see generally in the market, there's some pressure on capacity, but we also see some additional processing requirements from the incinerators and that is what we put through as an extra charge to cover for extra logistic and processing costs on the 1st of October.

And on the 1st of January, we tend to push through whatever inflation is expected for the for the year to come. So that is generally matching or slightly better than inflation. So that's on prices. And I think in market share so far, we have seen our competitors follow. So we are the market leader. We are leading in price and our competitors tend to follow because they basically see the same cost increases and requirements that we see. So generally, our market share is stable. And of course, we are also working on gaining market share rather than just have a stable market share.

Q - Juan CamiloRodriguez
Thank you, quite useful. A follow up, if I may, on the EPS level, because if I'm not mistaken, I saw on your presentation that you posted an underlying EPS of EUR0.24, if I'm not mistaken, or EUR0.25. So we should use this for the underlying performance at the full year level.

A - Annemieke den Otter{BIO 19604513 }
Yeah, I don't have --

Q - Juan CamiloRodriguez
That adjusts for the discount rate movement and so on. Right.

A - Annemieke den Otter{BIO 19604513 }
Yeah. So if you look at underlying, then that is excluding the discount rate movement, indeed. So if you look at how it flows through from EBIT to EPS for the underlying, there you can simply extrapolate because we do not expect any other big movements in tax or in interest other than the usual. So there you can simply extrapolate the EBIT you expect in the same way as you see it flow through in the half year.

Q - Juan CamiloRodriguez
Okay. Thank you.

Operator
Okay. We have a question from Joe Brent from Liberian Panmure. Joe, can you unmute yourself?

Q - Joe Brent{BIO 7545844 }
Absolutely. Good morning.

A - Annemieke den Otter{BIO 19604513 }
Morning.

Q - Joe Brent{BIO 7545844 }
Maybe try and be a bit helpful and do one at a time, if I may. Can we start off just by talking about your view of what the Netherlands construction outlook feels like?

A - Otto de Bont{BIO 20143505 }
Yeah. Yeah. So what we have seen over the last year is, of course, during COVID that the construction volume increased quite significantly because people were modelling -- re-modelling their houses. Then it has come down in '23, '24 and actually came below levels pre-Corona or pre-COVID. And what we have seen in the last six months is that construction volumes have stabilized. So it looks like we have bottomed out. Predictions from ING and others are that construction in 2025 will slightly increase as the Netherlands is still coping with a huge shortage on housing. But in summary, we have reached the bottom stable volumes right now and hopefully some improvement moving forward.

Q - Joe Brent{BIO 7545844 }
Thank you. And secondly, could you just talk through what the costs and benefits of OneRenewi might be if that's appropriate?

A - Otto de Bont{BIO 20143505 }
Yeah, well, we indicated it's a program that will go over the next two to three years consisting of different components. In terms of the restructuring, we already are mostly through this and we are announcing our final step in this -- later this month. If you look at the part around digitizing our processes, that is a longer term project that we are working on. So we expect that to take another two years where slowly but surely we will convert division and subdivision by subdivision over to this new system.

And the full benefits of that will truly be visible over two to three years where our objective is to reduce our overall cost by about EUR40 million. And then the third part is around culture. And of course, that doesn't cost much, but it is important to further underline our performance culture.

Q - Joe Brent{BIO 7545844 }
Thank you. And finally, for me, if I may, just on the invoice discounting, could you tell us on what the move was? I don't see I've got your notes with you, so it might be hard. From year end to interims and where that number appears in the accounts.

A - Annemieke den Otter{BIO 19604513 }
Yeah. I think it's in the comments, Joe. So we are, on top of my head, moving from EUR116 million to EUR126 million, roughly. So we have an additional EUR10 million of cash because of the invoice discounting.

Q - Joe Brent{BIO 7545844 }
And is that in other debtors, is that the number?

A - Annemieke den Otter{BIO 19604513 }
No, it's in cash because it's basically our invoice given to KBC who are paying us. So it's really the conversion of debtors into cash.

Q - Joe Brent{BIO 7545844 }
Thank you.

Operator
We have a question from Joren van Aken from Degroof Petercam. Joren, would you unmute yourself?

Q - Joren van Aken{BIO 22171216 }
Yeah, good morning. I missed the first part of the presentation, so apologies if you already answered this. But on ATM, you mentioned in the press release that the current TCG inventory is no longer a constraint on the throughput. So does that mean that in H2 we should expect a significant ramp up from today's level of 50 tons? And do you have any idea where this should go then?

A - Otto de Bont{BIO 20143505 }
Well, as I alluded to earlier, indeed, the legacy levels are to a level now that is, I would say, normalized. So your concerns in the past hopefully have been remediated. At the same time, to be able to increase the throughput, of course, you also need to increase your customer input. And that's what we're working on currently, but that doesn't go in a step change.

So we're working diligently to make sure that we are getting pipeline projects in and we will see a continuous improvement over the next years, in fact the next years, in fact, in this volume throughput. And your question around how much capacity would we have? Indeed, we have been running already test running at double the throughput that we are running today, so there is a lot of future capacity available for us to take.

Q - Joren van Aken{BIO 22171216 }
Okay. So it will be more gradual over a couple of years rather than, let's say, in the next six months?

A - Otto de Bont{BIO 20143505 }
Yes, absolutely. I think what you've seen, you see a step change in profitability, and that's really related to the fact that we are able to take these raw materials, the soil, and turn it into materials that you can sell in the market rather than you have to pay to get rid of them, which is what was the case in the past. So that is the big EBIT improvement.

Q - Joren van Aken{BIO 22171216 }
Clear, thank you.

A - Otto de Bont{BIO 20143505 }
You're welcome.

Operator
We have a question on the chat from James Bayliss from Berenburg. James asks, on M&A, is there a geographic focus?

A - Otto de Bont{BIO 20143505 }
On M&A, we obviously are looking at the current leverage and make sure that that's our first focus to deleverage. At the same time, we do see a consolidation in this industry, and we are constantly looking at potential opportunities. The first focus right now has been on our Specialities businesses, which, as you already know, are focused on multiple countries also outside of the Benelux to basically replicate what we do already very well in Coolrec and in Malta, and see how we can further grow those businesses, either by organic, like the investments we're making in France for Coolrec, but also potentially with inorganic. And the advantage of those would be that the acquisitions would be smaller in terms of size and scope, because at the end you buy a manufacturing operation, and the collection of the waste streams there in Specialties is already organized by others. So that avoids you to invest largely into trucks and employees.

Operator
Thank you. We have a question from David Larkam from Edison. Can you provide more details on the one-off benefits of circa EUR4 million? Where are you in terms of the cost programs, such as the consolidation of management in commercial, and how much of the savings are still to come through all smushed together?

A - Annemieke den Otter{BIO 19604513 }
Sorry, I only caught the first part.

Operator
So first one, more details on the one-off benefits of EUR4 million.

A - Annemieke den Otter{BIO 19604513 }
Yeah, I think there are a couple of different ones. It can be sort of a few accrual releases. It's some provision releases that we do not no longer need, because there were some smaller court cases, et cetera. So it's a mix of various things as usual.

Operator
The second question is, where are you in terms of the cost programs, such as the consolidation of management in the Commercial Waste division, and how much of the savings are still to come through?

A - Annemieke den Otter{BIO 19604513 }
I think when we look at the cost, we committed to the cost out program on SG&A cost that we called Simplify last year. So that is all done. That is resulting into roughly EUR15 million of cost savings and half of that has come through as a part of Simplify during the first half. When it comes to what Otto just talked about, about a OneRenewi organization, we have not put a number on that yet. There will be some savings, but also we are expecting to start implementation after approval from our works council, hopefully in the next couple of weeks, and then some cost savings will come through, but we have not put a number on that yet.

Operator
And we have a follow-up question from James Bayliss from Berenburg, also on M&A. Now that you have fully exited the UK, does that mean future M&A will solely be focused on Europe where you can drive operational synergies or would you consider any assets or acquisitions back in the UK or regions you don't currently operate in?

A - Otto de Bont{BIO 20143505 }
Well, certainly the municipal waste exit in the UK was specifically related to the fact that that was municipal waste, which we are not focused on at Renewi. Commercial Waste is something we're focused on. And as I just alluded to, our key focus right now, if you look at M&A would be looking at things like glass and appliances, where UK would certainly not be ruled out.

Operator
Thank you. We have no more questions at this time.

A - Otto de Bont{BIO 20143505 }
Okay, well, if there's no further questions, then I would like to thank you for your attention and we look forward to continue our dialogue in the near future. Thank you.

A - Annemieke den Otter{BIO 19604513 }
Thank you so much.

[superbobo] 12/11/2024 12:01

I've trimmed 80% of my position prior to RWI joining the 250 in the summer. Unfortunately the reality of the situation is that the company has a lot of issues to sort out and not much has changed since when the stock was trading sub 500 prior to the bid(apart from disposing of the UK operations with a small impairment to carry). A bid will never come in when the company is trading at 700/600p as the premium would be too small(given they rejected 50% uplift). So that takeover premium is slowly disappearing from the share price and its now trading at its fundamentals which are ok but not great. Unfortunately with all going on in the world the ESG hype is subsiding so it would be a long slog I suspect.

[sausage7] 12/11/2024 11:31

Sadly I think it’s the general malaise of the UK smaller companies sector George. Also perhaps continuing disappointment that the much vaunted ‘stick with the board’ policy to create value has been postponed for at least another 6 months until the final results.

[george stobart] 12/11/2024 08:39

so what's the market didn't like? the numbers were already pre announced

[elsa7878] 12/11/2024 08:10

In-line so around 69c this year or 57p. So PE 10.5
Next year there is a large forecast jump to 90c or 75p = PE of 8.
Any ideas for the large increase next year as it looks great value on that basis.
Thanks.

Edit: guessing it is to do with the end of the UK municipal payments, plus growth - extra debt payments.

[dplewis1] 12/11/2024 07:14

hTTps://www.londonstockexchange.com/news-article/RWI/half-year-results-for-the-six-months-ended-30-september-2024/16759373

[sausage7] 22/10/2024 14:00

Nice note George, thanks.

[george stobart] 22/10/2024 13:21

Not until the interims on 12 Nov 2024 (which have been pre-announced) but they will likely comment on an updated outlook for H2 which ends Mar-25.

Unless in the meantime Rt Hon Reeves slams taxes left and right, and Renewi decides to move the tax residency away from Milton Keynes, UK to Amsterdam to avoid the purge.

[sausage7] 22/10/2024 12:52

And the pain continues….any new news out there ?

[gregsc] 17/10/2024 20:16

Thank you outsize. I am not sure that I will still be around in 2032.

[outsizeclothes.com] 17/10/2024 16:41

Of course they won't tell you Greg.
You, as an actual part-owner of the Company (as opposed to our beloved Chairman), might in your wisdom want to pull their snouts out of the trough.
And we couldn't have that!
BUT WAIT !
The ECB interest-cutting cavalry is riding to the Company's rescue.
"We were right to refuse to tell you about the £8++ offer. Our earnings in 2032 will show that we were right, and the shareprice will reach that £8. But be patient - we've already told you that next year is not going to be any great earth shaker"

[gregsc] 13/10/2024 07:39

They refused an Aussie bid around that level before.
Anything could be happening in the background without telling us.

[george stobbart] 11/10/2024 18:44

Multiple companies are listed on London and have zero Uk assets (such as Helios Towers).

RWI recently promoted to FTSE250 and would be a suicide mission delisting as it will massive passive selling from ETFs.

The sensible thing to is just find a buyer at 850-1000p now that the UK pit is gone and move on.

[pdosullivan] 11/10/2024 16:41

Hard to see how they will continue to be eligible for UK index inclusion absent any continuing UK operating businesses.

[sausage7] 11/10/2024 14:23

Hello. So at long last the millstone around the company neck has been removed, admittedly at a cost, but once removed we would head for the sunlit uplands of the circular economy unencumbered by the UK money pit. And the stock is down tuppence. Hmmm. Oh well. Let’s prepare for a € listing.

[gregsc] 10/10/2024 07:06

Maybe they will close the UK quote.

[outsizeclothes.com] 10/10/2024 06:27

Now, bring on the bid !

[outsizeclothes.com] 10/10/2024 06:26

Yes. £150m to get rid, but at least we've got shot of the constant UK bleed.

[george stobbart] 10/10/2024 06:05

Bey bey UK with a few months delay. It’s been emotional, a bottomless pit sucking money out of Renewi for two decades.

At least they pulled it off and is now out of the books

[dplewis1] 10/10/2024 06:02

hTTps://www.londonstockexchange.com/news-article/RWI/completion-of-divestment-of-uk-municipal-operations/16707721

[george stobart] 09/10/2024 11:47

Seems more like a PR stunt by the looks without meaningful details on financials.

Next thing on the calendar is the interims on 12 Nov. Hopefully they close the UK sale by then

The more the UK division stays on the books the more likely they come out with a beat on top line revenue/EBIT but a miss on bottom line margins

[outsizeclothes.com] 09/10/2024 11:30

Another £7.8m spent, but apart from "increased efficiency for ATM" no expected actual financial benefit figures given to let shareholders see whether or not this is a ROI white elephant.
Have the Continental analysts trotted out anything figures-wise?
"this jetty will add 20%/50%/100% more turnover to ATM, and be worth another £€1m / €2m / £4m profit per year"
Or is this little more than another glossy announcement to help deflect their earlier abject failure to act on shareholders behalf?