Biffa trading update: company ‘confident of position’

Biffa has today (9 March) issued a trading update ahead of its full-year results for the 52 weeks ending 25 March, scheduled to be announced on 16 June.

The company reports that trading in the second half of the year has continued on course, with full-year underlying performance due to be in line with its Board’s expectations. Group Net Revenues for the eleven months to February 2022 were c.35 per cent than the last financial year, and c.20 per cent higher than the 2020 financial year. Excluding acquisitions, Biffa’s growth has been c.25 per cent and c.10 per cent higher, respectively.

Current performance

In Collections, like-for-like Industrial and Commerical volumes (adjusted for acquisitions) have stabilised slightly above pre-pandemic levels. In the update, Biffa states that, to date, it has successfully offset cost inflation and supply chain challenges with price increases and other measures, with the issue of HGV driver shortages easing in recent months.

In Specialist Services, the Industrial Services business is performing strongly, Biffa says. In Company Shop Group, the company notes that trading has continued to be challenged, but in recent weeks it has observed an improvement in both membership levels and gross margins.

The update also notes that the Resources and Energy division has benefitted from the recovery in both volumes and pricing.

Strategic Update

Biffa states that both the Simply Waste and Viridor acquisitions are trading in line with expectations. Integration is reportedly progressing to plan, with the company on track to deliver its ‘targeted synergies’.

The company notes that its rPET facility is expected to be operating at full pellet capacity in the new financial year, alongside the introduction of the UK Government’s Plastic Packaging Tax. Construction of Biffa’s third rHDPE line in Redcar is underway, expected to be operational in the 2024 financial year.

The construction of both of Biffa’s Energy-from-Waste (EfW) plants remains on schedule. Its ‘Newhurst’ plant is expected to commence commissioning in late 2022, with commercial operations scheduled for early summer 2023. The ‘Protos’ plant will follow around 12 months later, Biffa says.

Underlying cash generation, the company states, has been strong, with leverage at the end of March expected to be c.3x Adjusted EBITDA (on a post IFRA16 basis). The issuance of a further £195 million of new 8-, 10- and 12- private placement notes last month, provide ‘additional balance sheet strength’, leaving the £350 million Revolving Credit Facility undrawn at the year-end.

Outlook

The update notes that Biffa’s Board is pleased with the ‘performance and underlying resilience’ of the business. Although mindful of the potential impacts of events in Ukraine, it remains confident of the company’s position and reaffirms the forecast for the current year.