Cleanaway Waste Experiences Growth despite COVID-19 uncertainty
- Infrastructure growth supporting CWY
- Macroeconomic environment affected volumes of waste output during 2020
- New projects and Federal budget release informs positive outlook for FY21
On the 14th of October Cleanaway, Waste Management Limited (ASX: CWY) released their 2020 Annual General Meeting address from Chairman Mark Chellew, as well as Chief Executive Officer and Managing Director Vik Bansal. The release highlights strong financial performance during COVID-19, underlined by positive financial figures.
Part of the success that CWY has built throughout the year is the development of infrastructure, and acquisitions. Toxfree Solutions Limited has been fully integrated into CWY, helping achieve business sustainability goals in the landfill remediation and rectification program. SKM Recycling Group acquired in 2019 helped expand business infrastructure, allowing for other sustainable scheme development.
In a macroeconomic environment affected by the COVID-19 pandemic, businesses Australia-wide slowed down, which affected waste level outputs by companies. This was reflected in the waste volumes processed by the Solid Waste Services division, with a reduction in SME customers, but increases in residential waste.
The SKM addition will deliver a full-year contribution in FY2021, with plans to win new municipal contracts in Randwick, Wyndham, and the City of Casey in Melbourne. Renewal contracts include Blacktown, Hornsby and Cardinia.
The Industrial & Waste Service (IWS) net revenue declined due to a new strategy which saw the business exit sub-optimal contracts. With the focus upon higher-margin contracts and optimised asset utilisations, IWS saw an increase in earnings before interest tax, depreciation, and amortisation up 14.3 per cent. The Liquid Waste and Health Services also saw a great increase, adding value to the business portfolio. EBITDA margins rose 19.1 per cent and have future growth prospects.
In FY20, dividend considerations increased 15.5 per cent to AUD0.041, with earnings per share reflecting this in a 5.8 per cent increase. Revenue as a whole was up 2.1 per cent to AUD2,332 million, and net profit after tax grew 7 per cent to AUD150.3 million. No CWY workers were made redundant to achieve this growth. During COVID-19, safety precautions were taken to ensure safety, with a total recordable injury frequency rate half of 2015 levels.
Looking to keep the positive trajectory, CWY aims at proposing a development for an Energy-from-waste facility in Western Sydney as a joint venture (JV) with Macquarie Capital (ASX: MQG). The technology to be used is already operational in Europe and will help achieve environmental goals for the company.
Another project details an innovative plastic pelletising plant in Albury, NSW as a JV with Pact Group Holdings (ASX: PGH). The driving concept behind the plant is to create a truly closed-loop recycling solution for Polyethylene Terephthalate plastics which are currently collected from contracted work. The Perth Material Recycling Facility is also expected to be rebuilt by Q3FY21.
The outlook for FY21 is quite optimistic, especially with the recent release of the Federal budget which will affect small to medium enterprises. The company is currently tracking well, with broader conditions growing more favourable.