The artist formerly known as Shanks trading well as Renewi
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International waste-to-product company Renewi updated the market on its trading for the year ending 31 March on Friday, ahead of its preliminary results which would be announced on 25 May.
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The London-listed firm - formerly known as Shanks until its merger with Van Gansewinkel - said its trading performance remained in line with the board's expectations following its last trading update on 7 February.
It said the commercial division continued to perform strongly, particularly in the Netherlands, with ongoing volume and profit growth and the delivery of improvement initiatives.
“The organic waste treatment segment has performed particularly well, with improving end markets and strong operational delivery,” Renewi’s board explained in its statement.
“The hazardous waste division has also performed well, despite the deferral of some anticipated volumes into the next financial year.”
As the company had previously announced, the municipal division continued to experience “very challenging” market conditions with underlying improvement actions being implemented by the board, both to stabilise performance and to manage risk.
The London composting facility in Canada reportedly experienced short term operational challenges in the last quarter, which were now largely resolved.
“The former Van Gansewinkel businesses will be treated as one reporting unit for the month of March since completion of the merger occurred on 28 February 2017.
“Trading for these businesses in 2017 has continued to be encouraging and we are confident of a strong underlying March performance across that group.”
Extensive work was undertaken by Shanks and VGG, the board said, so that integration planning was well progressed in advance of completion on 28 February.
The combined Renewi team was working hard to integrate the two businesses and both the integration and the launch of Renewi was proceeding to plan.
“We will provide an update on 25 May.”
Net debt at 31 March 2017 was expected to be in line with the board's expectations following the completion of the merger, and the settlement of a number of initial transaction-related costs.
A number of non-trading and exceptional items were expected to be reported in the year ending 31 March, however, relating to the merger transaction and integration, and with respect to the market conditions and reduced performance of the municipal division.
“Transaction related items will include £30m of transaction costs plus the initial costs of integration and synergy delivery,” the board confirmed.
“The expected costs of the integration programme and the timing of the forecast €50m of synergy delivery cash costs that will deliver the €40m cost synergy benefits will be reported at the preliminary results on 25 May.”
Renewi said the items related to the municipal division were expected to comprise primarily the non-cash impairment of certain fixed and intangible assets - £9m - increased onerous contract provisions to reflect the current market environment - also £9m - provisions against costs of completing the commissioning of BDR, Wakefield and Derby - £19m and other items of around £3m.