Last close As at 05/08/2026
GBP8.68
▲ 0.09 (0.01%)
Market capitalisation
—
Research: Industrials
FY20 is ending in line with expectations and ATM resumed soil shipments during Q4. Waste management is considered to be an essential service during the coronavirus pandemic; while the wider business impacts are evaluated, Renewi has outlined initial cash preservation measures. Our estimates have been adjusted only to reflect no final dividend expectation and additional non-underlying charges in FY20; potential coronavirus impacts beyond this are under review and not currently reflected.
Written by
Renewi |
In-line FY20, coronavirus evaluation underway |
Year-end & initial COVID-19 update |
Industrial support services |
26 March 2020 |
Share price performance
Business description
Next events
Analyst
Renewi is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||||||||||||||||||||
FY20 is ending in line with expectations and ATM resumed soil shipments during Q4. Waste management is considered to be an essential service during the coronavirus pandemic; while the wider business impacts are evaluated, Renewi has outlined initial cash preservation measures. Our estimates have been adjusted only to reflect no final dividend expectation and additional non-underlying charges in FY20; potential coronavirus impacts beyond this are under review and not currently reflected.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/18 |
1,760.3 |
63.0 |
5.9 |
3.5 |
4.5 |
13.1 |
03/19 |
1,780.7 |
63.1 |
6.0 |
1.7 |
4.4 |
6.4 |
03/20e |
1,675.7 |
39.7 |
3.7 |
0.5 |
7.2 |
1.9 |
03/21e |
1,705.6 |
50.1 |
4.8 |
2.5 |
5.6 |
9.4 |
Note: *PBT and EPS (fully diluted) are normalised, excluding pension net finance costs, amortisation of acquired intangibles and exceptional items. Estimates are now on an IFRS 16 basis and for continuing businesses only.
ATM soil activities recovering as FY20 closes
For the closing year, Renewi’s performance is reported to have been in line with guidance overall with underlying divisional trading patterns very similar to those noted in the January update. Most noteworthy is ATM’s resumption of thermally treated soil deliveries to a first project following a two-year permitting hiatus and initial shipments of graded materials in the final quarter.
This positive news is tempered by recognition that the coronavirus pandemic is beginning to be reflected in waste volumes as FY20 draws to a close. Renewi’s operations have been classified as essential services and to date its multi-location business footprint has maintained full operational capacity. An expected downturn in waste volumes handled, driven by lower economic activity levels, is likely in turn to require managed capacity reduction. Established national government employment support structures in the Netherlands and Belgium – Renewi’s largest markets – are in position to provide financial assistance, with the prospect of announced UK support schemes coming on stream before too long.
End-FY20 core (pre-IFRS 16 and PFI/PPP non-recourse finance) net debt is expected to be sub €500m (c 3x EBITDA), consistent with our model. Headroom under existing banking facilities is approaching €200m. The strength and duration of coronavirus impacts on business activity levels are still to be quantified, but management is sensibly flagging €40m cash preservation measures in hand (passing the FY20 final dividend saves c €8m, the remainder to come from reduced capex). Unrelated additional FY20 non-underlying charges of c €32m are unlikely to have a material near-term cash flow impact.
The company’s proposed capital markets day has understandably been postponed and is now intended to coincide with the FY20 results announcement, scheduled for 4 June. At this time, Renewi will be reporting under a revised structure as individual companies within the current Monostreams division are being reallocated into three of the other four divisions (treating Commercial Waste as two regional divisions).
Exhibit 1: Financial summary
m's |
2018 |
2018 |
2019 |
2020e |
2021e |
2022e |
||
March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|
|
Sterling |
Euros |
Euros |
Euros |
Euros |
Euros |
Revenue |
|
|
1,565.7 |
1,760.3 |
1,780.7 |
1,675.7 |
1,705.6 |
1,740.3 |
Cost of Sales |
|
|
(1,276.9) |
(1,419.2) |
(1,470.4) |
(1,390.8) |
(1,415.6) |
(1,444.4) |
Gross Profit |
|
|
288.8 |
341.1 |
310.3 |
284.9 |
290.0 |
295.9 |
EBITDA |
|
|
156.9 |
176.3 |
179.7 |
154.6 |
163.5 |
171.8 |
Operating Profit (before GW and except.) |
69.1 |
82.5 |
85.5 |
74.0 |
81.4 |
88.2 |
||
Net Interest |
|
|
(14.2) |
(15.0) |
(14.4) |
(18.0) |
(16.0) |
(16.0) |
Other Finance |
|
|
(5.1) |
(7.1) |
(8.4) |
(16.0) |
(15.2) |
(15.2) |
JV/Associates |
|
|
2.3 |
2.6 |
0.4 |
(0.3) |
0.0 |
0.0 |
Intangible Amortisation |
|
|
(5.8) |
(6.7) |
(6.4) |
(6.6) |
(6.6) |
(6.6) |
Non Trading & Exceptional Items |
|
|
(95.7) |
(108.4) |
(145.1) |
(125.8) |
0.0 |
0.0 |
Profit Before Tax (Edison norm) |
|
52.1 |
63.0 |
63.1 |
39.7 |
50.1 |
57.0 |
|
Pension net finance costs |
|
|
(0.6) |
(0.7) |
(0.6) |
(0.2) |
(0.2) |
(0.2) |
Profit Before Tax (Renewi norm) |
|
51.5 |
62.3 |
62.5 |
39.5 |
49.9 |
56.8 |
|
Profit Before Tax (statutory) |
|
|
(50.0) |
(52.8) |
(89.0) |
(92.9) |
43.3 |
50.2 |
Tax - headline |
|
|
2.6 |
1.4 |
12.4 |
(3.4) |
(12.0) |
(13.7) |
Profit After Tax (norm) |
|
|
39.1 |
47.2 |
47.5 |
29.9 |
38.1 |
43.3 |
Profit After Tax |
|
|
(47.4) |
(51.5) |
(76.6) |
(96.4) |
31.3 |
36.5 |
|
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding (m) |
|
799.9 |
799.9 |
796.7 |
794.6 |
794.6 |
794.6 |
|
EPS - Edison norm (p/c) FD |
|
|
4.9 |
5.9 |
6.0 |
3.7 |
4.8 |
5.4 |
EPS - Renewi norm (p/c) FD |
|
|
4.8 |
5.4 |
6.0 |
3.7 |
4.7 |
5.4 |
EPS - (p/c) |
|
|
(5.9) |
(6.8) |
(11.7) |
(12.2) |
3.9 |
4.6 |
Dividend per share (p/c) |
|
|
3.05 |
3.46 |
1.68 |
0.51 |
2.45 |
2.68 |
|
|
|
|
|
|
|
|
|
Gross Margin (%) |
|
|
18.4 |
19.4 |
17.4 |
17.0 |
17.0 |
17.0 |
EBITDA Margin (%) |
|
|
10.0 |
10.0 |
10.1 |
9.2 |
9.6 |
9.9 |
Operating Margin (before GW and except.) (%) |
4.4 |
4.7 |
4.8 |
4.4 |
4.8 |
5.1 |
||
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
Fixed Assets |
|
|
1,456.3 |
1,669.2 |
1,439.6 |
1,559.8 |
1,548.7 |
1,536.1 |
Intangible Assets |
|
|
606.3 |
699.3 |
605.6 |
598.9 |
589.0 |
579.1 |
Tangible Assets (inc RoU assets) |
|
|
623.0 |
710.8 |
629.1 |
753.6 |
752.4 |
749.7 |
Investments |
|
|
227.0 |
259.1 |
204.9 |
207.3 |
207.3 |
207.3 |
Current Assets |
|
|
366.2 |
418.0 |
370.9 |
375.5 |
369.1 |
369.7 |
Stocks |
|
|
23.3 |
26.6 |
26.0 |
24.6 |
25.0 |
25.5 |
Debtors |
|
|
279.0 |
318.4 |
294.5 |
274.2 |
279.2 |
284.7 |
Cash |
|
|
63.9 |
73.0 |
50.4 |
76.8 |
64.9 |
59.5 |
Current Liabilities |
|
|
(545.8) |
(631.0) |
(717.8) |
(589.2) |
(594.8) |
(609.5) |
Creditors |
|
|
(532.9) |
(616.3) |
(599.1) |
(570.6) |
(576.2) |
(590.9) |
Short term borrowings |
|
|
(12.9) |
(14.7) |
(118.7) |
(18.6) |
(18.6) |
(18.6) |
Long Term Liabilities |
|
|
(894.3) |
(1,019.9) |
(895.1) |
(1,132.1) |
(1,082.9) |
(1,033.8) |
Long term borrowings |
|
|
(489.7) |
(558.9) |
(483.7) |
(548.6) |
(548.6) |
(548.6) |
Other long term liabilities |
|
|
(404.6) |
(461.0) |
(411.4) |
(583.5) |
(534.3) |
(485.2) |
Net Assets |
|
|
382.4 |
436.3 |
197.6 |
214.0 |
240.1 |
262.5 |
|
|
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
|
Operating Cash Flow |
|
|
128.4 |
143.6 |
86.8 |
139.1 |
168.8 |
185.8 |
Net Interest |
|
|
(16.9) |
(19.1) |
(17.7) |
(28.6) |
(22.2) |
(22.2) |
Tax |
|
|
(6.7) |
(7.6) |
(13.2) |
(3.4) |
(12.0) |
(13.7) |
Net Capex |
|
|
(81.2) |
(92.3) |
(99.4) |
(94.7) |
(105.8) |
(105.8) |
Acquisitions/disposals |
|
|
(4.1) |
(4.8) |
22.7 |
101.3 |
0.0 |
0.0 |
Equity Financing |
|
|
0.6 |
0.6 |
(2.7) |
0.3 |
0.0 |
0.0 |
Dividends |
|
|
(24.4) |
(27.6) |
(27.4) |
(8.6) |
(5.2) |
(14.2) |
Net Cash Flow |
|
|
(4.3) |
(7.3) |
(50.9) |
105.4 |
23.6 |
30.0 |
Opening core net debt/(cash) |
|
|
423.9 |
492.7 |
500.0 |
552.0 |
490.4 |
502.3 |
IFRS16 lease capital repayments |
|
|
0.0 |
0.0 |
0.0 |
(35.4) |
(35.4) |
(35.4) |
Other |
|
|
(10.5) |
(0.0) |
(1.1) |
(8.4) |
0.0 |
0.0 |
Closing core net debt/(cash) |
|
|
438.7 |
500.0 |
552.0 |
490.4 |
502.3 |
507.7 |
Closing PPP/PFI non-recourse net debt |
|
82.9 |
94.6 |
95.4 |
89.3 |
89.3 |
89.3 |
|
IFRS16 Lease finance |
|
|
|
|
|
144.0 |
102.4 |
60.8 |
Source: Company accounts, Edison Investment Research. Note: Estimates are on an IFRS 16 basis and for continuing businesses only.
|
||||||||||||
|
||||||||||||
Research: TMT
Piteco Spa generated solid organic revenue and EBITDA growth in FY19 of 7% and 9% respectively and continued to benefit strongly from recent acquisitions. FY20 started very well, although the COVID-19 pandemic is likely to affect growth. It is still early days and Piteco is not directly affected. Indeed, its products can help steer financial and treasury decision-making at times of crisis. A potential global recession would be likely to cause a softening in the demand for Piteco’s products. Piteco continues to trade at a discount to Italian and international software peers.