Profits at recycling and waste management company Viridor have remained flat, its parent Pennon Group has reported.
In Pennon Group’s preliminary results for the year ended 31 March 2014, it revealed that Viridor’s revenue was up 14 per cent to £802 million with earnings before interest, tax, depreciation and amortisation (EBITDA) and before exceptional charges broadly flat at £76.3 million compared to £77.7 million in 2012/13.
But profit before tax was down 19.5 per cent to £27.6 million.
Recycling revenue fell by £17.1 million in its financial year 2013/14 due to lower prices.
The overall average revenues per tonne from recyclate sales and gate fees for the year fell to £93 per tonne, which was 6.1 per cent lower than for 2012/13.
Viridor believes that recyclate prices have now stabilised for most commodities, but it remains cautious on the prospect for recyclate prices and continues to focus on revenue optimization and facilities rationalisation and cost reduction.
The company also said that while landfill continued to be strongly cash generative contributing £25.3 million to EBITDA, average gate fees were down by 9 per cent to £23.06 per tonne in the year and costs up 19.4 per cent to £21.90 per tonne as a result of higher provisioning.
As landfill provision declines, a net pre-tax exceptional impairment charge of £42.9 million has been recognised by Viridor to write-down the carrying value of landfill property, plant and equipment.
Energy from waste continues to be a key market for the company, and by 2020 it expects to have a 15 per cent EfW market share in the UK.
In announcing profit before tax of £207.3 million for Pennon Group with South West Water performing well, chairman Ken Harvey said: “Financial performance at Viridor before exceptional items has been in line with management expectations. Notwithstanding the difficult trading conditions, Viridor’s operating contribution is slightly ahead of last year and PBIT plus joint ventures is broadly similar to last year.
“The company has made excellent progress in establishing its energy from waste business which will transform Viridor into a leading player in the UK renewable energy sector.
“The EfW contracts and projects already contribute to Viridor’s bottom line and reflect the realisation of a strategy which is expected to contribute circa £100 million to Viridor’s EBITDA within the next three years.”