Renewi maintains expectations amid mixed first half

(Sharecast News) - Waste-to-product specialist Renewi unveiled a series of commercial, operational and financial initiatives on Wednesday, while maintaining its full-year expectations amid a mixed first half.

The London-listed firm, holding its capital markets event, said it aimed to achieve organic revenue growth of more than 5% per annum.

It was also looking to maintain a high single-digit EBIT margin, generate free cash flow of at least 40% of EBITDA, and attain a return on capital employed (ROCE) exceeding 15%.

Looking at its current trading, Renewi said its full-year performance was expected to align closely with the board's expectations.

It said group revenue and underlying EBIT in the first half was lower than the prior year, driven by the previously communicated normalisation of recyclate prices from the exceptionally high levels in the early part of the last financial year.

Most recyclate prices had now stabilised at lower levels, with the majority of the decline and ongoing inflationary pressures offset by dynamic pricing and the margin benefits from the Renewi 2.0 digitisation programme.

Within commercial waste, volumes stabilised in Belgium but saw a continued decline in the Netherlands during the second quarter, given ongoing demand weakness, mainly from construction and demolition customers.

In response, the company said it was implementing a series of divisional and central cost measures expected to offset the impact of lower volumes largely.

Mineralz & Water's performance in the first half reflected the pull forward of planned maintenance stops, with the second half now anticipated to be stronger than expected.

The shipping of thermally treated soil under the offtake contract confirmed earlier this year had started.

In addition, a commercial agreement was reached for the offtake of 200 kilotonnes of Forz sand, signalling its continued recovery.

Within specialities, Renewi's glass recycling business, Maltha continued delivering record performance due to operational improvements and targeted investments.

Coolrec enjoyed continued substantial volumes but was impacted by lower plastics prices, while the UK municipal business performed slightly ahead of expectations in the first half, benefiting from stable operational performance.

"We are proud of the critical role Renewi is playing in closing the loop to a circular economy - as a pure play recycling market leader, we are enabling the decarbonisation of our world," said chief executive officer Otto de Bont.

"Our business has tremendous potential, and today, we will outline how our strategy is driving both top and bottom line growth whilst delivering sustainable shareholder returns."

At 0930 BST, shares in Renewi were down 1.38% at 713p.

Reporting by Josh White for Sharecast.com.