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Viridor remains cautious about future recycling price growth

Date: Wed, 20 May 2015 | Author: Paul Sanderson

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Major recycling and waste management company Viridor has said it is taking a cautious view on the future price of recyclate.

In the preliminary results of its parent Pennon Group, Viridor revealed that during the financial year 2014/15, the recycling volume it traded decreased by 151,000 tonnes to 1.7 million tonnes.

It also said that recyclate prices, while slightly lower than 2014/15 have “now stabilised to some degree for most commodities but remain under pressure, reflecting world economic conditions and competitive markets”.

As a result of this, average revenues per tonne from recyclate sales and gate fees for the year fell to £86 per tonne, 7.7% lower than for 2013/14.

However, Viridor revealed that it is seeing benefits from its two-year Input, Throughput and Output Optimisation programme that is yielding productivity benefits.

This means that Viridor will focus on these three key parts of the value chain:

 

  • · Inputs - Managing and enforcing contractual waste specifications to ensure appropriate input quality, further reduce reject levels and optimise asset processing efficiency;
  • · Throughput - Implementation of Productivity Centred Maintenance under an asset management optimisation process has commenced to improve availability and productivity at recycling facilities. In 2014/15, two underperforming Materials Recycling Facilities (MRFs) were closed to reduce the cost base and improve portfolio efficiency; and
  • · Outputs - Aiming for customer-centric quality production aided by investment in technology. A new polymers separation plant at Rochester and a new glass reprocessing plant in Scotland, representing an investment of c.£25m, are now operational.

 

During the 2014/15 financial year, Viridor opened five new energy recovery facilities (ERF) at Exeter, Ardley, Cardiff, and two in Runcorn. This means that two thirds of its ERF portfolio is now operational, meaning it is on track for around £100 million of EBITDA in 2016/17 from ERFs.

As a result of all of this revenue at Viridor was up to £835.9 million in 2014/15 from £802.0 million the year before.

Profit before tax increased just a fraction to £27.7 million from £27.6 million in 2013/14.

Viridor chief executive Ian McAulay said: “I’m delighted to say that Viridor has now passed a strategic point of inflexion for the business. The ERF business is now operational with five new ERFs brought online during the year.

“We are well on track to meet our target of circa £100 million of EBITDA from ERFs in 2016/17. Viridor is well-positioned in its other businesses given regulatory drivers for recycling from the EU and UK Government, significant cash being generated in landfill energy, and contracts and collection providing valuable input materials for our ERF and recycling businesses.”

For Pennon Group, which also owns South West Water, group revenue increased to £1.357 billion in 2014/15 from £1.321 billion a year earlier.

Group profit increased to £197 million from £158.7 million a year earlier.   

Category: Recycling
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