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Waste giants post positive half year results

Some of the biggest waste management companies in Europe have reported positive half year results, although they have highlighted challenges in their waste and recycling operations. In response, they are looking to restructure and diversify their revenue streams.

Sita’s parent Suez Environnment posted a 6.7% increase in pretax profits in comparison to the same period last year. Veolia’s pretax profits were up 28.4%, and Pennon group said that the performance of its waste subsidiary Viridor was in line with expectations.

FCC’s pretax profits fell 34.7% year-on-year, but the company attributed the decline mainly to the write-down of a construction subsidiary and fines incurred by its energy subsidiary.

However, they all pointed at subdued European waste and recycling operations in the first half of the year. Suez pretax profits in the segment were down 4.6%, Veolia’s 3.3% and FCC’s 19.3%.

Some of the main drivers of the decline were lower volumes and falling prices of secondary raw materials, the companies said, with Veolia citing a 15% drop in the prices of recovered paper, and a 12% fall in the prices of scrap metals.

Adam Read, practice director, waste management and resource efficiency at Ricardo-AEA, told MRW there was little sign that international markets for recyclable material would improve in the second part of the year, which would prove challenging.

“For most of the waste management companies, the main sources of income are gate fees for material coming in and energy or recycling for material going out,” he said. “Lower prices of recyclable materials are likely to affect them, and they cannot compensate with higher gate fees because they can either lose their clients or long-term contracts with local authorities do not allow them”

Less than sparkling six months for recycling activities, however, followed positive year-end results. In 2012, 16 of the largest waste players reported a second consecutive year of growth, as Catalyst Corporate Finance noted in its annual report on the industry in the latest CIWM Journal.

There were also positive signs in the latest Office for National Statistics’ figures of the Index of Production, which indicated a 3% expansion of the UK waste output in Q2 in comparison to Q1 of 2013, as MRW reported.

Waste companies are now actively seeking new revenue streams in response to difficulties in their waste collection and recycling operations.

Many are focussing on energy from waste, with Veolia, Sita and Viridor combined planning some 26 new EfW plants in the next seven years, according to Catalyst Corporate Finance.

And energy from waste is also evolving to provide not only electricity, but also heat, as well as a network to distribute it, as exemplified by Veolia’s Southwark facility (see box below) which Estelle Brachlianoff, Veolia’s director for northern Europe and the UK “shows the circular economy in action”.

Read said that the shift in activities will take longer to bring about visible benefits on the companies’ financial results. However, he added: “It is good to see, because many of us would have been worried that the waste management sector was under threat.”

 

Veolia’s CHP plant in London

Veolia has invested £7m to include heat generation in its energy from waste plant in Southwark, London. The company said that the upgrade will create the first heat from waste network in the capital.

The South East London Combined Heat and Power energy recovery facility was built in 1990s.

It processes some 430,000 tonnes of waste every year and generates electricity to feed the national grid. The expansion will allow the facility to also produce heath to be distributed to homes in the Southwark borough.

The investment is part of a 20-year partnership with Southwark council. Veolia expects the scheme to be running by the end of the year.

Readers' comments (1)

  • Waste incineration removes material and nutrients from the system and should therefore not be considered part of the circular economy.

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