Cleanaway has announced earnings growth and operating leverage in its full year results. It announced a 8.7 per cent net profit rise to $152.9 million, due to an increase in its solids, liquid and health waste services.
Cleanaway Waste Management Limited (Cleanaway) announced a statutory profit after tax of $112.6 million, down 6.6 per cent on a year ago in its financial results for the year ended 30 June 2020.
The company’s full year net profit rose to $152.9 million and its revenue increased 2.1 per cent to $2.3 billion.
Vik Bansal, Chief Executive Officer and Managing Director of Cleanaway, stated in the full year results released on Wednesday 26th August that Cleanaway’s financial results highlight the defensive characteristics of its revenue streams.
Solids Waste Services reported increased net revenue and earnings. Excluding commodities, FY20 net revenue increased 2.4 per cent from $1.26 million to $1.29 million. However, Industrial & Waste Services reported lower net revenue and earnings, with net revenue decreased 8.3 per cent to $313.4 million.
The result reflects the impact of COVID-19 and lower commodity prices, which was partially offset by reduced rebates to customers.
The introduction of a landfill levy in Queensland on 1 July 2019 resulted in reduced landfill volumes in Queensland, which were partially offset by higher collections and resource recovery volumes.
“Upgrading of the SKM assets has been completed enabling Cleanaway to produce higher quality commodities that will ultimately be reused in new products as we move further towards a circular economy,” the results stated.
Liquid Waste & Health Services reported net revenue increased 3.8 per cent to $513.6 million, compared to FY19. Cleanaway’s Health Services continues to grow with the re-signing of some of its major customers for a further three to five years.
Bansal said the year presented a number of new challenges and each operating segment – Solid Waste Services, Industrial & Waste Services and Liquid Waste & Health Services – performed well during the year despite the effect of COVID-19.
“Over the past year we strengthened our position as Australia’s leading integrated waste management business through our acquisition of most of the SKM Recycling Group’s resource recovery assets, and the successful integration of both those assets and the Toxfree business,” he said.
“These acquisitions largely completed our Victorian and Tasmanian resource recovery footprints. We remain the market leader in every sector in which we operate, and our network of prized waste infrastructure assets across the country continues to grow.”
Crediting its FY20 achievements, Cleanaway stated its objective is to drive a circular economy in Australia and it will pursue several key projects that are strategically important for the business.
“Our proposed energy-from-waste facility in Western Sydney provides a more environmentally friendly solution to Sydney’s growing waste disposal needs,” Bansal said.
In coming months, construction of a plastic pelletising plant in Albury NSW will commence.
“We also announced a plastic pelletising plant in Albury NSW in a joint venture with Pact Group Holdings Ltd and Asahi Beverages. This facility will create a genuine closed loop recycling solution for the plastics we currently recover through our collections network.”
In the short term future, The WA regional CDS scheme “Containers for Change” is expected to commence on 1 October 2020 with Cleanaway providing logistics and processing services.
Cleanaway forecasts that due to COVID-19, trading conditions remain too variable to provide an outlook for FY21.
“Trading conditions so far this year have been mixed across the country. The impact of COVID-19 continues to be more pronounced in Victoria. We saw some recovery in June over April and May,” Cleanaway stated.
The company confirmed enterprise performance in July 2020 has been in line with the FY20 average monthly performance.
“Responsive and proportionate cost management will continue to be actioned as we see market conditions changing.”