Viridor has posted an 8.4% fall in pre-tax profits to £57.6m in the year to the end of March 2012.
The waste management giant recorded a 6.9% increase in revenues, which hit £761.1m due to a string of acquisitions (see box below), according to its parent company’s preliminary 2011-12 financial results.
Parent company Pennon Group said the profit drop was due to falling recyclate prices in the second half of the year and that it remained “cautious” about a price recovery in the near-term.
Pennon reported group profits were up 6.4% to £200.5m, with notable growth areas including its South West Water division, which saw a 9.8% rise.
Its preliminary results statement said: “Viridor is not immune to the difficult conditions in the world economy and as flagged previously, recyclate prices fell over the second half of 2011-12 from the peak seen in the first half of the year.
“Viridor’s financial performance will continue to be impacted by trends in recycling and landfill.
“We are cautious about the prospect for a recovery in recyclate prices in the near-term.”
The statement added: “Nonetheless recycling remains a very profitable business and is Viridor’s largest profit generator.
“Longer-term, PPP and EfW projects already contribute to the bottom line and the healthy pipeline could more than double Viridor’s earnings before interest, taxes, depreciation and amortization, within the next five years as more plants come on stream from 2013-14 onwards.”
Virador financial highlights
- Revenue increase of 6.9% to £761.1m in 12 months to end of March 2012.
- The company attributed this to its 2011-12 acquisitions of Storm Recycling, Community Waste, JWS Churngold and the Veolia South West collection businesses.
- It also benefited from the full-year effect of the 2010-11 acquisitions of Reconomy recycling companies, Pearsons, Adapt Recycling, Swinnerton and Martock, which accounted for £23.1m.
- Existing business increased by £26.0m (including an increase in landfill tax collected of £17.8m).
- Around 50% of Viridor’s profits now come from recycling and energy from waste. Recycling remains its largest profit generator.
- Profits in the firm’s 16 municipal contracts were up overall, and stable in the collection business.
- In EfW, the company reported 107MW of landfill gas capacity, and a further 29MW from incineration and AD, with a further 115MW committed but not operational. Viridor said it was “targeting total renewable energy capacity of over 300MW in four years’ time”.