Viridor is said to have reached a turning point, despite its parent company posting lower profits for the first half of 2014-15.
Pennon Group reported that in the six months to September Viridor’s earnings before interest, tax, depreciation and amortisation (Ebitda) dropped by 32% year-on-year to £28.1m.
As with the latest full-year results, the landfill business suffered the largest decline, down 29.5%. The company said gate fees had decreased by 15.3% as a result of price competitions by operators seeking to fill their sites.
Ebitda from recycling activities dropped 23.7% following lower volumes and revenues per tonne, but the company managed to reduce costs so that margins decreased only by £1 per tonne to £12.
Ken Harvey, chairman of Pennon Group, said Viridor’s performance was in line with expectation and he expressed optimism for the second half of the year as more energy-from-waste (EfW) facilities become operational.
“[The EfW plants] are expected to boost ebitda in the second half of 2014-15 and result in 2014-15 full year ebitda for Viridor exceeding 2013-14,” he said.
Two plants, one in Oxford and one in Exeter, become operational in the period, while three others were either in, or approaching, handover testing.
Another EfW project, in Dunbar, Scotland, has received the final go–ahead and construction will start early next year.
Viridor noted that all facilities benefited from more than 60% of their feedstock coming from long-term contracts and the rest from shorter terms industrial and commercial waste agreements.
Pennon said: “Excellent continuing progress [has been made] in the strategic reorientation of Viridor’s business model from landfill to energy recovery facilities – has now reached point of inflexion.”
Overall, group pretax profits in the first half of the year declined by 9.8% to £100m, driven by Viridor’s subdued performance. South West Water, Pennon’s other subsidiary, also reported lower profits.