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Viridor hails EfW and recycling profits

The Pennon Group has reported significant growth in Viridor’s energy-from-waste (EfW) and recycling profits.

Pennon’s full-year financial results revealed EBITDA from Viridor’s recycling contracts grew more than 70% to £22.7m this year. The growth was partly down to a series of contract renegotiations and reduced overheads, the company said.

Viridor is in talks with the Greater Manchester Waste Disposal Authority (GMWDA) over terminating its £3.8bn waste and recycling contract. The company is looking at provision for compensation laid out in the contract.

A contract with Milton Keynes Council is also being adjusted.

EBITDA from EfW projects grew by nearly 20% to £106.9m. Pennon Group chief executive Chris Loughlin said the company’s energy recovery facility portfolio had beaten its target of delivering EBITDA of £100m.

In November, Pennon confirmed investment in a 12th EfW plant, a £252m facility in Avonmouth. Currently, Viridor has eight such plants up and running.

Its Glasgow Recycling & Renewable Energy plant is expected to be fully operational this year, after contractor Interserve was booted off the project. Construction is in progress on facilities in Dunbar and Beddington.

Despite the encouraging results, Viridor’s overall revenue fell slightly to £793.5m.

At the launch of the full-year results, Loughlin said the company was looking to “squeeze assets” for EfW in the future, possibly through permit changes.

He also indicated that because prices for recycled materials affected the market, it would be “more natural” to wait for local authority contracts to end before renegotiating rather than changing existing terms and conditions.

“Pennon has delivered a strong performance in 2016-17 across its water and waste businesses,” he said. “Across the group we are investing for growth while driving efficiency to keep costs low for the benefit of our customers.

“We believe Pennon is well positioned now and for the future, and our performance underpins our long-established, sector-leading 10-year dividend policy of 4% growth per annum above RPI inflation out to 2020.”

Viridor’s management structure changed last year when Ian McAulay stepped down as chief executive. Phillip Piddington was installed as managing director and he reports directly to Loughlin.

 

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