Keeping up Cleanaway’s reputation

Following the release of Cleanaway’s earnings, CEO Vik Bansal shares how the leading waste management company grew and remained resilient through delivering its 10-year strategic plan.

“Whether it’s our food production, waste collection or supply chain logistics, we need some things to continue – but they’ve got to do so safely,” Victorian Premier Daniel Andrews said in August, at the height of the state’s second wave of the coronavirus pandemic.

Many Australian businesses and industries have come to a halt, but as hospitals around the country have increased operations and PPE requirements, waste management has too been at the forefront of the epidemic as a vital service to enhance health and safety of all communities.

The waste and recycling industry has continued to provide critical waste services to the public.

As Australia’s leading total waste management, industrial and environmental services provider, Cleanaway Waste Management has the responsibility to keep its people safe and employed while servicing its customers on the frontline.

Following the end of the 2020 financial year, Cleanaway released its full year results, which included earnings growth through operating leverage and cost discipline.

Through the company’s acquisitions, partnerships and ongoing sustainable objectives, investors and industry decision makers were eager to find out how the company continued financial growth in its services and how the current climate was reflected in both profit and achievements.

Chief Executive Officer and Managing Director of Cleanaway, Vik Bansal, is pleased with how the company has been able to deliver on its commitments whilst delivering a strong financial performance in the circumstances.

He credits the Cleanaway Way – a strategy for the why, what and how – giving the company alignment across its business to focus on performance.

“Nothing that’s happened through COVID-19 has given us a reason to question our strategy. It continues to serve us well and has contributed to our success,” Bansal says.

“We benchmark ourselves against the leading global waste management companies and strive to be the company that sets the standard, which inevitably leads to a strengthened waste management sector.”

EARNINGS GROWTH DURING COVID-19

Cleanaway’s financial results for the year ending 30 June 2020 (FY20) saw a 8.7 per cent net profit rise to $152.9 million, due to an increase in its solids, liquid waste and health services.

The company announced its statutory profit after tax as $112.6 million, down 6.6 per cent on a year ago. However, its full year revenue increased 2.1 per cent to $2.3 billion.

The company comprises three operating segments – Solid Waste Services, Industrial and Waste Services and Liquid Waste and Health Services.

Bansal stated in the full year results released on 26 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 billion to $1.29 billion. The result reflects the impact of COVID-19 and lower commodity prices, which were 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 the state, which were partially offset by higher collections and resource recovery volumes.

“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,” Bansal says.

“These acquisitions largely completed our Victorian and Tasmanian resource recovery footprints.”

The COVID-19 pandemic is undoubtedly generating tonnes of medical waste. There is a global shortage of PPE and the Federal Government is working with industry to increase local production of PPE in a sustainable manner.

Due to heightened PPE requirements and increased disposal of medical waste from the health workforce, it was expected that Cleanaway’s Liquid Waste and Health Services would report earnings growth.

Liquid Waste and Health Services reported net revenue increased 3.8 per cent to $513.6 million, compared to FY19.

Cleanaway’s Health Services continue to grow, with the re-signing of some of its major customers for a further three to five years.

Cleanaway’s Industrial and Waste Services reported lower net revenue and earnings, with net revenue decreasing 8.3 per cent to $313.4 million.

Data from Roy Morgan showed that over 4.3 million people, nearly one third of Australians, have been ‘working from home’ during the last few months since the COVID-19 pandemic shut down large parts of the Australian economy.

While COVID-19 has created challenges, it has not changed Cleanaway’s strategy.

“We will continue to grow all segments of our business and look to improve both the quality and quantum of our earnings.

“This includes ensuring our capital is appropriately invested and delivering the returns that our shareholders expect,” Bansal says.

TREKKING TOWARDS FOOTPRINT 2025

Bansal says Cleanaway remains a leader in every waste stream in which it operates.

However, he notes that being a leader comes with responsibility, and the company strives to maintain the highest standards and work towards its mission, “to make a sustainable future possible.”

“We’re excited about the potential of on-shore closed loop recycling solutions enabled by partnerships and some of the government incentives,” he says.

“Circular economies are growing and becoming more mature across a number of waste streams, and they represent a real opportunity for economic growth in Australia.”

Bansal says the company’s objective is to drive a circular economy in Australia and it will pursue several key projects that are strategically important for the business.

In 2017, Bansal laid out Cleanaway’s Footprint 2025, a roadmap to ensuring Australia has the right infrastructure in place to support communities in managing their waste, while continuing to improve resource recovery.

“Our society will always produce waste in some form, and Footprint 2025 will continue to respond to those needs while extracting value from the various waste streams through our infrastructure, resulting in sustainable outcomes,” he says.

For example, Bansal says Cleanaway has proposed an Energy-from-Waste facility in Western Sydney to recover resource from residual waste, which otherwise goes to landfill.

“We’re also building a plastic recycling facility in Albury, which will turn used plastic bottles into new containers as part of a genuine circular economy.

“This is part of how we achieve our mission,” Bansal says.

Bansal says Cleanaway is looking forward to partnering with government, industry and the private sector to make a circular economy possible.

He notes that it’s important to include product stewardship in that plan and that there is a need for product manufacturers to participate in waste reduction and resource recovery strategies.

Cleanaway recently announced a joint venture with Pact and Asahi to build a $45 million PET plastic pelletising facility, Circular Plastics Australia, which will use plastic from recycled bottles to manufacture new drink containers for Asahi products.

He says harmonising standards and definitions across the sector are measures Cleanaway strongly supports to improve compliance and regulation.

“This would also enable national consumer education campaigns to improve community understanding of waste streams, thus reducing contamination and improving recycling rates,” Bansal says.

Trading conditions remain unpredictable for the foreseeable future due to COVID-19.

However, Bansal is confident in saying that Cleanaway is a market leader in every sector in which it operates, and its network of prized waste infrastructure assets across the country will continue to grow until the final footprint is cemented in 2025 and beyond.

This article was published in the October edition of Waste Management Review.