Renewi plc ("Renewi" or the "Group") (LSE: RWI.L: Euronext Amsterdam: RWI.AS), a leading European waste-to-product company, provides the following trading update for the three months ended 30 June 2024 (“Q1”).

Financial Highlights (note financial results are shown for continuing operations, excluding UK Municipal given its status as an asset held for sale)

1. Revenue: €434.4m, 3% year-on-year growth underpinned by higher core volumes and input prices in both Commercial Waste and Specialities (FY24: €421.7m). In particular, volumes for Commercial waste in the Netherlands continued to recover, with Belgium showing a slowdown of topline growth.
2. Underlying EBIT: €22.3m, 3% higher year-on-year. The contribution of lower one-off gains in the Commercial Waste division compared to prior year was largely offset by higher input prices and the impact of SG&A cost reduction in Commercial Waste (FY24: €21.7m).
3. Core net debt: €430.8m compared to €368.1m at the end of March 2024 largely driven by seasonal working capital, which is expected to normalise over the course of the year.
4. Sale of UK Municipal: CMA approval has now been obtained and good progress made on the remaining few Conditions Precedent required for completion. Timing remains on track to complete over the course of this calendar year.

Delivery against strategic objectives

Renewi continues to deliver against its medium-term strategic priorities of portfolio optimisation, strengthening its core operations, and organic growth of >5%.

Portfolio optimisation

The sale of UK Municipal to Biffa, announced on 30 May 2024, has progressed well and is on track for completion as expected. Mineralz & Water (“M&W”) has continued the positive momentum that started in the 2H of FY24, with the business on track to deliver a year of good progress in FY25 in line with its recovery plan.

Stronger platform

The Group's Simplify programme, announced in FY24 to streamline staff functions and reduce costs, continued to yield benefits and remains on track to deliver the expected run rate savings in FY25. The roll out of Group’s Future Fit digitisation programme which will replace legacy IT systems is also progressing well, giving the Group a stronger foundation to improve future efficiency and drive growth in the medium term.

Organic growth

The acceleration of the Commercial Waste sales strategy, initiated in the second half of FY24 has generated further new business wins in Q1, particularly in the small-to-medium enterprise segment, which has helped to mitigate the effect of ongoing mixed market conditions. Within Specialities, Coolrec and Maltha continued their strong growth performance, fuelled by additional volume from new contracts combined with investments in quality and accretive operational improvements, which continued to yield benefits. During the quarter Renewi announced its intention to partner with Freepoint Eco-Systems, a leading provider of advanced plastic recycling solutions. The partnership aims to divert end-of-life plastics from incineration by developing the sorting and treatment infrastructure. The goal is to supply up to 80,000 tonnes of feedstock to Freepoint Eco-Systems’ first European advanced recycling facility, located in Ghent, Belgium.

In May 2024, Renewi announced that it will offer an innovative digital CO2 and recycling reporting tool to all its Dutch customers this year. This tool meets the European Corporate Sustainability Reporting Directive (“CSRD”). The new CSRD requires companies to report their impact on climate, society and policy, with waste being a key theme. The Company has commenced offering its reporting tools to companies and recently announced its collaboration with Heijmans, a leading Dutch construction company, to help provide them with a waste monitor via the MyRenewi portal.

Q1 FY25 performance

Throughout the quarter recyclate prices in the market remained largely stable, with a slight year-on-year increase across most categories, except for recycled wood.

The Commercial Waste division continued to experience mixed demand conditions, reflective of the wider economic backdrop in the region.

Cost of waste was higher due to higher transport and treatment costs caused by temporarily constrained incinerator capacity. The construction sector in the Netherlands remained subdued during the quarter though incoming volumes from construction and demolition waste improved in Q1.

SG&A costs were lower in Q1, reflecting the impact of the Simplify cost initiatives and further reduction of excess capacity. The Group’s cost and efficiency programmes are expected to deliver an increasing benefit through the FY25 as initiatives reach full run rate impact. Within Specialities, strong revenue growth continued from both Coolrec and Maltha. However, M&W revenues remained largely flat as the growth in soil and water treatment was offset by the planned reduction in revenue from low-margin activities, which were discontinued last year, including bottom ash treatment. Underlying EBIT grew strongly across the Specialties division, fuelled by M&W in line with its recovery plan and by Coolrec also delivering strong EBIT growth.

Outlook

Whilst market conditions remain mixed, particularly in the Commercial Waste division, the benefits of the Group’s commercial and cost initiatives underpin the continued expectation of good progress in FY25, with growth momentum anticipated to increase as the year progresses. As previously guided, leverage is expected to increase in the short term, to approximately 2.9x upon completion of the sale of UK Municipal, before reducing as the benefits of materially stronger cash generation are delivered. Looking ahead, Renewi is committed to delivering on its medium-term targets of a high-single digit underlying EBIT margin and organic annual revenue growth of >5%.

Commenting, Renewi’s CEO Otto de Bont said: "We continue to deliver on our strategic objectives of portfolio optimisation strengthening our platform and accelerating organic growth. Throughout the quarter we continued to see the benefits of our Simplify programme, which is helping to continually drive improved performance and efficiency. Looking ahead, our FY25 outlook is unchanged, reflecting our strong foundation and our strategic progress."