Biffa’s shares climb despite making £52.8m pre-tax loss
Shares in waste management firm Biffa rose on the FTSE 350 this morning, even though it reported revenues and profits falling last year.
They were up by 4.6 per cent to 306p at around midday as the group revealed its results were ahead of expectations and stated it was ‘strongly positioned’ to recover when the Covid-19 pandemic dies down.
This was despite its statutory revenues declining by around 10 per cent to £1.04billion while it went from a pre-tax profit of £56.4million in the 2020 financial year to a £52.8million loss in the 12 months to March 26 this year.
Cleaning up: Biffa did see total volumes recover to end at 82 per cent of prior year levels
Biffa said it was severely impacted by the closure of hospitality venues causing a fall in commercial food waste, a weaker performance in its construction-dominated Inerts business, and lower plastic waste prices.
The company did see total volumes recover to end at 82 per cent of prior year levels, but the impact of three national lockdowns caused significant damage to its business in the first and fourth quarters.
In the opening quarter, Biffa said it received a £70million hit from the shutdown of nearly half its Industrial and Collections (I&C) customers, but even as business improved the next quarter, the group was affected by weakness in its Seaham recycling facility.
The I&C business, which forms part of Biffa’s Collections division, saw its revenues plunge 17.9 per cent to £495.5million, while the division’s other businesses – municipal and specialist services – recorded small percentage rises.
The High Wycombe-based firm was also hit by £13.7million in costs related to an IT replacement project and more than £8million in charges from impairment charges at its Poplars anaerobic digestion plant Staffordshire.
This plant, which was built a decade ago and recycles leftover food into gas, was hurt by the drop in food waste and gas generation at the site being adversely affected by an increase in hand sanitiser in the food it collected to recycle.
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‘It has been a year none of us want to repeat but certainly one which showed us at our best,’ remarked chief executive Michael Topham, adding: ‘We are pleased to have been able to end the financial year with results ahead of our expectations.
‘We are strongly positioned for the post-pandemic recovery with leadership positions in our core markets, a well-developed investment programme and exciting growth opportunities ahead, leveraging the group’s unique position at the heart of the circular economy.’
Despite difficulties caused by the pandemic, Biffa has bought numerous companies to try and take advantage of the recovery, including the Company Shop Group, the UK’s biggest redistributor of surplus food.
And last week, it purchased the collection division and certain recycling operations of Viridor Collections business in the hopes of earning another £85million in potential revenues each year.
The company is aiming to become a net zero emissions business by 2040, an entire decade ahead of the UK government’s target, having already cut its emissions by around two-thirds since 2002.
It said today that it had reduced greenhouse gas emissions by 17 per cent over the last year by launching the UK’s biggest electric bin lorry fleet in Manchester, meaning that emissions are down 40 per cent over the previous five years.
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