Renewi

[gappy]

Hi I have been lurking for a while as I have investments in some of the companies mentioned here. One of my other green investments is in the waste/recycling company Renewi. I think of them as a long term investment. The circular economy has to be the way forward if we want to deal with all the pollution.

Renewi (RWI) are Europe's leading waste to product business
Just had a good set of results.

Revenue up 10% to EUR1,869m
-- Underlying EBIT1 up 83% to EUR133.6m, with net impact of customer pricing, recyclate pricing and cost inflation delivering a year-on-year benefit of EUR45m
-- Commercial Division increased underlying EBIT1 margins by 380bps to 10.0%, with the return on operating assets increasing to 31.6%
-- Underlying EBIT1 up 77% compared with the pre-Covid FY20 reference period
-- Underlying EPS1 up 118% to 98 cents, basic EPS increased from 7 cents to 93 cents
-- Statutory profit of EUR75.4m (FY21: EUR5.5m#)
-- Core net debt* reduced to EUR303m (FY21: EUR344m) and net debt to EBITDA reduced to 1.4x from 2.2x

Share price is up this week because of a take over bid for Biffa another waste company.

Recyclate prices are up and likely to stay that way. Governments are legislating to reduce landfill. Manufacturers are trying to use recycled material to reduce their carbon footprint.
Current energy prices are increasing the costs of virgin material.

Some quotes from a plastic recyclate report in April.

“Standard recyclate April 2022: Material bottlenecks, high virgin material prices drive up recyclate prices / Quantities are often only sufficient for regular customers / Further inflation in May as demand grows “

“more new customers entered the recyclate market due to the shortage of virgin materials, which put recyclers in a good negotiating position. “

“Demand could thus noticeably exceed supply in this market sector. “

Gappy

[WickedLester]

I took a quick look at these after you posted about them and I must admit it looks interesting and doesn't look unduly expensive for a company which may have good long term growth prospects.

The balance sheet is a bit weaker than I would normally like and can you tell me, are they exposed to rising energy costs as I would have thought that recycling was fairly energy intensive or am I talking nonsense?

[monabri]

http://financials.morningstar.com/ratio ... region=GBR

Margins...are very low ( too low). Energy costs ( Wickedlester's point) will have a further drag.

What was the reason for shareholder dilution ( 40m to 80m shares)?

New CFO , 1st June 22.

Divi cuts ...then a Covid zero (after years of paying a divi that was uncovered by the fcfps).

Looks to be very overpriced ( factor of 3).

https://simplywall.st/stocks/gb/commerc ... res#health

[gappy]

are they exposed to rising energy costs as I would have thought that recycling was fairly energy intensive or am I talking nonsense?

It is energy intensive but most of their energy costs are hedged for 2022.

[UncleEbenezer]

Buy!

Sell!

Nice to see a lively market. I haven't made up my mind where I stand.