Viridor has posted a rise in underlying profit in its first half of 2018-19, as increasing revenue from energy from waste (EfW) offset lower recycling income resulting from China’s waste import restrictions.
Viridor’s half-year results in the six months to 30 September show £36.2m profit before tax, an 18.3% increase on the same period in the previous year.
The results said its EfW portfolio had “delivered strong operational performance”, with a 28.8% increase in earnings to £66.6m.
But the company’s profits look less favourable when taking into account a £6.5m credit made after the Greater Manchester Waste Disposal Authority (GMWDA) decided to end its PFI deal with Viridor/Laing.
The credit was based on a settlement with the GMWDA, including outstanding claims on construction, and has been classed as a non-underlying figure in the H1 2017-18 accounts.
Viridor’s accounts therefore show a small drop in non-underlying profit before tax.
The company is optimistic that the Government’s forthcoming resources and waste strategy will boost recycling markets.
It said changes to extended producer responsibility and the packaging recovery note systems were “expected to improve the returns from investments in recycling, a key factor being standardised collections increasing household waste quality”.
Following a fall in materials prices at the beginning of 2018 due to China’s import restrictions, Viridor earnings on the recycling market improved somewhat.
Recycling earnings hit £7.4m in H1 2018-19 against £4.4m in the previous half year. But when comparing H1 2018-19 with H1 2017-18, there is a 30.2% drop in earnings.
Viridor added that higher quality recyclates had seen revenue per tonne up 13.4% to £110, but this has been countered by a drop in production.
Chris Loughlin, chief executive of Viridor’s parent company Pennon, said the development of Viridor’s EfW portfolio “will support Pennon’s earnings growth to 2020 and beyond”.
He added: “Waste market dynamics are favourable, with the Blue Planet-effect spurring action, and we are optimistic that positive changes will be announced in the Government’s resources and waste strategy later this year, enabling a UK recycling system fit for the future.”
Viridor is still in discussion with Interserve about recovering expenses incurred by delays to construction of the Glasgow Recycling and Renewable Energy Centre. Interserve was removed as contractor on the project in 2016 after failing to meet its targets.