In This Article:
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Renewi PLC (SHMCF) completed its portfolio optimization, exiting or remediating underperforming businesses.
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The company generated 20 million of free cash flow in the first half, marking a significant improvement from past negative cash flows.
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Renewi PLC (SHMCF) achieved a 4% revenue growth and a 9% EBIT increase, driven by strong performance in the minerals and water division.
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The divestment of the UK municipal business has significantly de-risked the balance sheet.
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The company has a strong pricing power in its commercial waste business, covering cost inflation effectively.
Negative Points
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The company still faces subdued volumes in its commercial waste division, impacting overall performance.
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Recycled prices have been stable but lower compared to the previous year, affecting revenue.
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There are ongoing restructuring costs and non-cash charges related to changes in discount rates on long-term provisions.
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The company expects temporarily elevated leverage and higher interest charges due to the UK divestment.
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Market conditions remain challenging, particularly for the commercial waste sector, requiring ongoing EBIT improvement measures.
Q & A Highlights
Q: What are your expectations for any one-off benefits in the second half for the commercial waste segment? A: We tend not to model these, but generally, there are always some pluses and minuses at the year-end, maybe a couple of million, but not a significant number. (Unidentified_2)
Q: Can you elaborate on the journey towards the EUR20 million EBIT goal for the minerals and water segment by 2026? A: The focus has been on improving quality to sell sand and gravel to the concrete industry. We expect a gradual improvement in volume, potentially growing 5-10% per year, while maintaining a 10% EBIT margin. (Unidentified_1)
Q: What is the medium-term outlook for the recycling rate, and how sensitive is it to profit? A: Our current recycling rate is around 66%, with a long-term ambition to reach 75%. We expect to add 1-2% to the recycling rate annually, although it is influenced by the mix of incoming waste streams. (Unidentified_1)
Q: Can you provide guidance on the EPS level and the impact of price increases on market share? A: We are comfortable with consensus, but note that it includes the UK Muni. For EPS, it will flow through from EBIT, excluding noncash impacts like discount rate changes. Price increases are generally in line with inflation, and competitors tend to follow, keeping market share stable. (Unidentified_2)