Viridor reported a pretax profit drop of more than a third year-on-year following declining recyclate prices and landfill volumes, despite an “aggressive” restructuring programme.
Viridor’s parent company Pennon Group published its 2012/2013 results today, announcing a 37.5% fall in pretax profits to £36.5m for its waste management subsidiary. Revenues were also down 7.5% to £704m.
Putting pressure on Viridor’s performance were falling recyclate prices, which reflected worsening world economic conditions and uncertainties on China’s growth outlook, according to the company.
“Viridor had predicted a price fall but the scale of it, particularly in the second and third quarters of the financial year, was even greater than the company had expected,” the company said.
Profits decreased despite some measures that Viridors undertook last year to offset the impact of declining prices. Those measures included an “aggressive” restructuring programme, especially in the company’s recycling business, which saw the closure of six facilities, and the laying-off of 152 employees.
Also mentioned as a factor impacting Viridor’s performance was a decline in landfill volumes in the UK, which the parent company said reflected a weak economic climate.
Pennon Group chairman Ken Harvey said: “Viridor is continuing to respond aggressively to the near term challenges in recycling and landfill which have necessitated site rationalisations, headcount reductions and exceptional charges in relation to asset impairments and provisions.”
Despite declining profits and revenues, Pennon said that Viridor made strong, long-term progress in the Energy from Waste (EfW) and Public Private Partnership (PPP) markets. Those areas are expected to contribute more than £100m to Viridor’s profits over four years.
The group said: “EfW will represent the low cost solution for disposing of residual waste (which is currently landfilled) when landfill tax reaches £80 per tonne in April 2014.”
Pennon said Viridor is targeting a 15% market share in the EfW, including joint ventures, by 2020, with a network of strategic facilities in operation, under construction or planned.