Renewi has reported earnings up by 30% to £69.1m, despite losses in its municipal waste division due to “challenging” PFI contracts.
Its results for the year to 31 March 2018 also showed overall revenue up 8% to £1.5bn and underlying profit before tax doubled to £51.5m.
But exceptional items of £101.5m resulted in a statutory loss before tax of £50m, which included a £73m loss in the UK municipal operation arm and £22m in costs arising from the merger between Shanks and Van Gansewinkel Groep, which led to the creation of Renewi in 2017.
Chief executive Peter Dilnot said: “We have made good progress in our first full year as Renewi. Underlying [profit before tax] doubled, coming in slightly ahead of our upgraded expectations, and our cash performance was strong.
“We exceeded our synergy target for the year, further developed our detailed integration plans and established Renewi as a new and powerful brand in our core markets.”
Dilnot said the commercial division delivered a strong performance, as had the ‘monostreams’ division – which includes glass bottle banks, discarded WEEE, organics and incinerator bottom ashes. These offset the performance of the hazardous waste and municipal divisions.
The latter operates in the UK and Canada and recorded a £9.3m loss. “The PFI market remains challenging in the UK,” Renewi’s results noted.
It explained: “An increasing number of PFI contracts have come under pressure as a result of austerity measures, poor performance or because the contracts have proven to be inappropriate in the current market environment.
“Within this unfavourable market, our municipal division’s portfolio of assets has been vulnerable contractually to the volatile recovered fuel markets, rising continental European incinerator gate fees and the weakness of sterling.”
The company said it sought to manage this through operational improvements, contractual negotiations and, where appropriate, exiting activities.