(Alliance News) - Biffa PLC on Wednesday said its performance in the second year-half has continued to be ahead of its base case expectations, with the third lockdown hitting earnings less severely than originally anticipated.
The FTSE 250-listed waste management firm based in High Wycombe, UK said net revenue in the third quarter is at 97% of the levels achieved in 2019. In January, it reported third quarter net revenue at roughly 95% of the prior year's levels. Fourth quarter levels are now expected to be 92% of those in the same period in 2019 due to the impact of the nationwide lockdown in England.
Industrial & Commercial volumes are at 80% of prior year levels for the fourth quarter, which is higher than the predicted 70% to 75% range Biffa said in January.
Underlying earnings before interest and tax for the financial year ended March 26 is expected to be "well ahead" of the board's previous expectations, in the range of GBP42 million to GBP44 million. This is due to "strong" management of receivables and cash collection that materially reduced the need for doubtful debts provision, resulting in the release of the provisions in the fourth quarter. Biffa noted that consensus stands at GBP33.8 million.
Looking ahead, Biffa said it is "increasingly well-placed" with leadership positions across waste reduction, recycling, collections and energy recovery and will be exiting financial 2021 with net debt of between GBP440 million and GBP460 million. As at the end of 2020, it had net debt of GBP426 million.
"Biffa's performance over the last year demonstrates the resilience of its model as a provider of essential services, whilst the delivery of its strategic investment programme, including the earnings enhancing acquisition of Company Shop Group, enhances Biffa's unique position at the heart of the circular economy," Biffa said.
Biffa acquired UK surplus food and household products redistributor Company Shop Group Ltd for an upfront enterprise value of GBP82.5 million last Thursday. It said the purchase will help to further improve its capability to support its customers' waste reduction and recycling targets, as well as offering growth opportunities with "increasing regulatory, social and environmental tailwinds, underpinning a significant addressable market opportunity."
Shares in Biffa were up 6.2% at 272.50 pence in London on Wednesday.
By Zoe Wickens; zoewickens@alliancenews.com
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