Renewi

Investment summary

Further Commercial progress and tangible evidence that ATM can become a more positive contributor to group earnings were Renewi’s strongest H120 messages. As previously announced, Monostreams was mixed with profitability down 16% overall, with UK Municipal revenue and profit also lower. Working capital inflow, controlled capex spend and initial disposal proceeds (Municipal Canada only) all contributed to a reduction in core net debt to €514m or 2.88x EBITDA (down from 3.06x at the end of FY19). Trading so far in H220 has matched management expectations at the headline level and FY20 guidance is unchanged. Outlook caveats in Commercial caused us to temper our expected future growth rate here pending further updates. Despite this, we expect Renewi to enter FY21 with a more progressive corporate agenda – starting with its Euronext listing at the end of January – centred on improving profitability of the continuing businesses.