Renewi: So Far, So Good
Edison | Jul 24, 2018 07:33AM ET
The recent AGM update was consistent with FY18 commentary; guidance and our estimates are unchanged. Year-to-date progress is clearly visible in three divisions where market conditions appear to be favorable. In the fourth (Hazardous), new customer demand is successfully building; management’s expectation remains for this to start to be met during H2, subject to regulatory clearance. Flagged merger integration benefits for FY19 are as before. The intention to move to euro-based reporting with the H119 results is entirely logical and reflects the company’s primary source of profitability.
FY19 starts in line with existing guidance
Brief updates were provided on each of the four divisions. The largest of these is Commercial, where the initial roll-out experience for a new IT platform has been favorable in Belgium (where completion is expected by year end) and is now underway in the Netherlands (a larger, more complex market with roll-out variations). As a backdrop, local volume and pricing conditions appear to be good albeit with some tightness in incinerator capacity. Reference to calmer paper and plastics recyclate pricing is helpful but perhaps less significant for Renewi PLC (LON:RWI) than other operators. In Hazardous, management has reiterated an expectation that ATM soil remediation operations should resume full production during H2; there is clear demand building although regional authority regulators remain a hurdle. Elsewhere, the Monostreams and Municipal divisions are both trading ahead of the prior year thus far and Municipal’s Ottawa facility is moving to an improved volume footing following a revised customer agreement. At the group level, we are reminded that Renewi is on track to realise €30m of merger integration benefits by the end of FY19 (ie an incremental €15m in this financial year).
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