Shares in Anglo-Dutch waste treatment firm Renewi (RWI) gained 5.8% to 27.5p after trading in the first quarter to 30 June exceeded management’s initial Covid-19 expectations.

Rather than a €20 million hit to earnings, the impact was a more manageable €12 million which meant the company suffered no net cash outflow during the period.


Commercial waste volumes in the Netherlands ‘improved steadily’ through the quarter with bulky waste and construction volumes largely offsetting lower roller bin collections.

Volumes also improved in Belgium although the firm cautioned that further volume recovery depended on ‘the successful easing of lockdown restrictions, including in specific sectors such as hospitality, and the extent of the economic recovery.’

The Mineralz & Water division, which treats contaminated water and soil, ‘performed slightly better than expected’ as soil processing volumes rose, and new capacity in the second half should spur a further increase.


Thanks to ‘swift’ action on costs the firm saved €10 million of cash outflows in the quarter, and it is sticking to its target of saving ‘over €60 million of cash’ this financial year.

Net debt at the end of June was €413 million, a drop of €44 million from the end of March, and took the company’s gearing to below three times against a limit of 5.5 times in the next banking covenant review in September.

As the firm points out, waste volumes tend to be resilient through economic cycles and the shift towards increased recycling is still a ‘strong long-term structural growth driver’ for the business.

However, given that the current downturn is unlike other cycles, with activity coming to a sudden stop across all industries in all geographies, the full year outcome will depend on the speed of the recovery, especially in late cycle industries such as construction where it says it is ‘alert to the potential for a decline.’

Should volumes not reach the levels it is hoping for in the second half, the firm has contingency plans to cut costs further.


Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 07 Jul 2020