Renewi plc: Half Year Trading update (1138037)

 
 Renewi plc (RWI) 
Renewi plc: Half Year Trading update 
 
01-Oct-2020 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
This announcement contains inside information 
 
1 October 2020 
 
          Renewi plc 
 
 ("Renewi", the "Company" or, together with its subsidiaries, the "Group") 
 
          Half Year Trading update 
 
 Renewi plc (LSE: RWI), the leading international waste-to-product business, 
         announces its trading update for the period from 1 April 2020 to 30 
     September 2020, in advance of the Group's interim results which will be 
                     issued on 10 November 2020. 
 
                     Highlights 
 
  · Overall trading in the first half has been materially ahead of the 
  Board's Covid-19 adjusted expectations 
 
  · Good recovery in Commercial volumes during Q2 with Netherlands now 
  operating at 96% and Belgium at 90% of prior year 
 
  · Cost savings of &euro10m delivered during the first half, on track to be 
  ahead of the &euro15m expectation for the full year 
 
  · Strong cash performance, with a cash inflow of &euro63m to the end of 
  August and leverage is expected to remain below 2.9x as at 30 September, 
  broadly in line with pre-Covid-19 levels and well below the adjusted 
  covenant of 5.5x 
 
  · Liquidity remains strong in excess of &euro300m 
 
  · ATM recovery on track with new silos being installed to store new filler 
  product 
 
  · Renewi 2.0 programme progressing well with secured savings slightly 
  ahead of plan 
 
  · Good progress with the innovation pipeline, especially with bio-LNG, 
  construction materials and RetourMatras 
 
  · Long-term drivers for sustained future earnings growth remain strong 
 
          Trading and cash materially ahead of the Board's Covid-19 adjusted 
                     expectations 
 
  Stronger than expected volumes and effective cost action means that Renewi 
 has materially outperformed its Covid-19 adjusted expectations in the first 
                     half. 
 
  Commercial Waste Division has seen volumes continue to recover well during 
    the second quarter and Renewi maintained full operational capacity, with 
    only a few employees in Belgium on furlough. In the Netherlands, volumes 
 recovered from 94% of prior year in the first quarter to an expected 96% in 
       the second quarter, with strong construction and bulky waste activity 
          continuing to offset weakness in commercial roller bin collection, 
       especially in Covid-affected sectors such as hospitality. In Belgium, 
    volumes have recovered from 76% of prior year in the first quarter to an 
      expected 90% in the second quarter. An adverse product mix and reduced 
  efficiencies in route collection have been partially offset by strong cost 
   action. Recyclate prices were significantly below last year, as expected. 
 
   Mineralz & Water Division has performed as expected, with inbound volumes 
 weaker as a result of Covid-19 and the lower oil price reducing sludges and 
   contaminated water from shutdowns in Rotterdam. Specialities Division has 
    recovered well in the second quarter, with volumes picking up especially 
                     strongly in Coolrec. 
 
     Cost actions across the Group have delivered savings of &euro10m in the 
 first half, on track to be ahead of our previously announced target for the 
    year of &euro15m. These have included short term reductions in Board and 
executive salaries, reduced overtime, use of temporary staff and third-party 
                     services, and lower discretionary spend. 
 
          Cash performance has also been better than expected. Core net debt 
   (excluding IFRS 16 lease liabilities) at the end of August was &euro407m, 
    representing a reduction of &euro50m since 31 March 2020 and leverage is 
     expected to remain below 2.9x as at 30 September 2020, with significant 
  headroom against the adjusted covenant of 5.5x. Days sales outstanding has 
  remained unchanged on prior year and levels of customer insolvency have so 
                     far remained low. 
 
Exceptional charges are expected to be in line with the previously announced 
cost of the Renewi 2.0 programme, with the sole addition of &euro6m (&euro3m 
      non-cash) relating to the closure of two production lines at Ghent and 
                     Houthalen in Belgium. 
 
                     Good progress with value creating strategic initiatives 
 
   Renewi outlined its new strategy with its full year results in June 2020, 
 with three key initiatives to deliver additional earnings of up to &euro60m 
                     in the coming three to five years. 
 
The recovery of ATM has made good progress during the first half of 2020. An 
      initial shipment of thermally cleaned soil (TGG) was completed in May. 
Further outlets of up to 1MT are in late stage discussions with the relevant 
   authorities and some are expected to become available in the second half. 
New silos for filler and other storage equipment to enable the separation of 
 cleaned soil into construction materials, like sand, gravel and filler, are 
 being installed and will be commissioned on time in the fourth quarter. The 
   order book for contaminated soil is building steadily but projects may be 
                     subject to delay as a result of Covid-19. 
 
   Our Renewi 2.0 programme has also made positive progress during the first 
  half. Secured savings are slightly ahead of plan, despite some elements of 
the programme deliberately being delayed due to Covid-19. Initial modules of 
         two projects namely the MyRenewi customer interface and the digital 
           procure-to-pay system are expected to go live in the second half. 
 
   Good progress has also been made with the innovation pipeline, focused on 
       high quality secondary materials for the growing circular economy. In 
        addition to progress at ATM for secondary construction materials, an 
  agreement with Shell and Nordsol has been signed for the installation of a 
 bio-LNG production unit at a Renewi facility. Progress on other projects in 
                   the portfolio will be presented with the interim results. 
 
                     Outlook 
 
        The Board remains suitably cautious about the macroeconomic outlook, 
            including any potential future slowdown in the later-cycle Dutch 
     construction market and potential further measures to contain Covid-19. 
     However, given the resilience of the Group's trading in the first half, 
which included a period of extensive lockdown measures in the first quarter, 
   the Board now anticipates a performance for the year ending 31 March 2021 
   which is materially ahead of its previous Covid-19 adjusted expectations. 
 
Longer term, whilst the speed and extent of economic recovery will influence 
     our performance, waste volumes have historically been resilient through 
   cycles and the transition to increased recycling will continue to support 
our business model. The sustainability agenda and the potential for a "green 
      recovery" supported by the EU and national governments are expected to 
   present attractive opportunities for Renewi to convert waste into a wider 
    range of high-quality secondary materials. We remain confident our three 
  strategic growth initiatives - recovery of earnings at ATM, the Renewi 2.0 
 programme and our innovation pipeline - will deliver significant additional 
                     earnings over the next three years and beyond. 
 
For further information: 
 
FTI Consulting           Renewi plc 
 
[phone]         [phone] 
 
Susanne Yule             Adam Richford, Head of IR 
[phone]         [phone] 
 
Richard Mountain         Michelle James, Communications 
 
www.renewiplc.com [1] 
 
About Renewi 
 
    Renewi is a leading waste to product company that gives new life to used 
materials every day. We have around 7,000 employees working at 174 operating 
  sites across Europe. Our extensive operational network means we are always 
                     close to our customers. 
 
 For Renewi, waste is a state of mind, and an opportunity. Our many years of 
 knowledge and experience, combined with a broad range of services, allow us 
  to offer sustainable, practical recycling solutions. We use innovation and 
    the latest technology to turn waste into useful materials such as paper, 
     metal, plastic, glass, wood, building materials, compost and energy. In 
other words, we turn today's waste into tomorrow's raw materials. The result 
    of our work is less waste and contamination, a smarter use of scarce raw 
      materials, and a reduction in carbon emissions. This means that we are 
 contributing towards a cleaner, circular world in which we "waste no more". 
 
              Visit our website for more information: www.renewiplc.com [2]. 
 
ISIN:           GB0007995243 
Category Code:  TST 
TIDM:           RWI 
LEI Code:       213800CNEIDZBL17KU22 
OAM Categories: 3.1. Additional regulated information required to be 
                disclosed under the laws of a Member State 
Sequence No.:   85195 
EQS News ID:    1138037 
 
End of Announcement EQS News Service 
 
 
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(END) Dow Jones Newswires

October 01, 2020 02:00 ET (06:00 GMT)