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Viridor results show decrease in recycling revenue and EBITDA

Viridor’s half-year earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by £3.5m (7.8%) to £41.4m, while its overall revenue was up 5.3% to £398.2m.

Recycling revenue decreased £5.5m due to lower prices but landfill was up £5.5m due to higher landfill tax. Construction revenues were also up, reflecting growth in assets under construction.

The figures were announced in parent company Pennon Group’s unaudited results for the half year ended 30 September.

Pennon Group chairman Ken Harvey said Viridor’s financial performance had been in line with management expectations”.

He said: “As previously stated this will be a transitional year for Viridor and the company expects profit before interest and tax (PBIT) plus joint ventures in 2013/14 to be broadly similar to 2012/13. Cost reductions are delivering an improvement in recycling margins per tonne compared with the second half of 2012/13, offsetting the trend decline in landfill.

“Viridor has continued to make strong progress on building its EfW business and securing base-load contracts. These projects are expected to drive the company’s long term profit growth.”

Viridor’s stated strategy for recycling activities is on production of high quality materials, and management of the cost base to improve margins. Its landfill energy business is focused on managing the expected decline in landfill inputs by concentrating on strategic sites and alternative uses. It has made progress on the construction of its PPP/EfW asset base and aims to have 15% of the EfW market share by 2020.

At a glance:

  • PBIT fell £3m (14.3%) to £18m
  • PBIT plus joint ventures decreased by £4.4m (15.8%) to £23.4m but was 30.7% higher than H2 2012/13
  • Profit before tax decreased £6.2m (28.8%) to £15.3m reflecting lower PBIT plus joint ventures and the increased interest charge from higher provisions
  • Capital expenditure including spend on service concession arrangements and on Peterborough EfW for the half year was £146.6m (H1 2012/13 - £145.4m) of which circa £131m was for Viridor growth projects (largely EfW) with the balance being maintenance of existing assets
  • During the half year recycling volumes traded increased by 38k tonnes (4.0%) to 974k tonnes, of which 14k tonnes were from prior year acquisitions.
  • Overall average revenues per tonne from recyclate sales and gate fees for the half year fell to £93, 9.4% lower than for H1 2012/13 and 6.1% lower than for H2 2012/13.
  • Profits in “Contracts & Other” were up overall across the 15 municipal contracts around the UK
  • Profit from landfill gas generation was £14.3m, an increase of 36.1% on H1 2012/13.
  • EfW contracts and projects already contribute to the bottom line and are expected to add more than £100m to Viridor’s EBITDA within the next three years.
  • Total joint ventures’ contribution (comprising Lakeside, VLGM and TPSCo), which consists of interest on shareholder loans and share of profit after tax, fell 21% to £5.4m (H1 2012/13 - £6.8m).

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