Biffa’s has reported “strong growth in revenue, profits and cash flows and good progress in execution of its proven strategy”.
Included in its results for the 53 weeks to 30 March 2018 were:
- Net revenue up 8.8% to £977.7m (2017: £898.8m) (4.4% organic and 4.4% acquired)
- Underlying EBITDA up 8.9% to £150m (2017: £137.7m)
- Underlying operating profit up 10% to £81.2m (2017: £73.8m)
- Underlying profit after tax up 33.8% to £47.9m (2017: £35.8m)
- Proposed final dividend of 4.53p per share (2017: 2.40p)
Chief executive Ian Wakelin said: ‘’We are delighted to report another year of strong performance by Biffa. Our strategy remains unchanged: to grow market share, develop services and infrastructure, and optimise systems and processes, and we are pleased with the progress made against all three of these strategic goals.”
The company completed seven acquisitions in the year, and Wakelin said its “pipeline of potential targets remains strong”, with further acquisitions expected in the coming year.
“We have made good progress in evaluating the investment opportunity we have in energy from waste (EfW) alongside our partner Covanta, and expect to be able to announce an investment in due course. The UK has a significant shortage of EfW treatment capacity and we are well placed to facilitate and invest in these much-needed facilities.”
Wakelin, who has also announced he will be leaving the company, acknowledged that “the recycling markets continue to be challenging, however the environmental and economic drivers of recycling remain compelling and the actions we are taking position us well for the future”.
Results by divisional performance revealed that the underlying operating profit within Biffa’s municipal division had fallen by 20.9% from £11m in 2017 to £8.7m in 2018. It said that “margins had been reduced due to market pressures, higher than anticipated mobilisation costs on new contracts and specific challenges with the legacy Leicester City Council integrated waste management contract”. It said revenues in this division were likely to decline 6-8% in the coming year.
Its commercial and industrial division showed improvements. Net revenue increased 9.9% to £574m from £522.1m the previous year, while underlying operating profit increased to £48.1m from £38.5m the previous year. This was attributed to new customer wins including KP Snacks, Arcadia and Kerry Foods, as well as acquisition revenue growth. Improved margins were achieved through optimisation of costs, continued customer pricing discipline and delivery of acquisition synergies.
In its resource recovery and treatment division, net revenue increased to £121.3m. Reasons for this included fully commissioning and delivering its polymers recycling expansion plan, strong landfill pricing and volumes – the latter had increased 11.8% in the year. It acknowledged challenges in this division due to the Chinese import restrictions, but said it put in place a ‘swift and decisive’ response including focusing on quality, revising terms with local authority partners, diversifying end markets and modifying plant operations to focus on separated paper.