Existing guidance on Renewi PLC (LON:RWI) for FY19 has been maintained. As before, this is partly dependent on ATM resuming full production by the end of October and an update on this will come with the H119 results, which are scheduled for 8 November. Otherwise, a better Municipal performance appears to be compensating for slight Q2 softness in other sub-sectors. Share price performance YTD is at odds with trading newsflow and H119 results may serve to remind investors of the value opportunity on offer.
Some Q2 variations, on track overall
Trading newsflow has been positive for Municipal year to date with improving operational performance in both the UK and Canada and successful exits from two facilities in Scotland. Hazardous trading has matched management’s expectations (see below) as has Monostreams, save for two glass reprocessing sites in the Maltha JV where challenges were noted. The important Commercial division implicitly saw slightly lower y-o-y volumes in Q2 – admittedly against a strong comparator – and is progressing the roll out of its route optimisation projects (Belgium underway, Netherlands about to start).
In ATM, Renewi continues to work towards restoring regulatory permitting for its thermal soil remediation process and to develop alternative revenue streams. Our estimates already factor in a lower FY19 Hazardous Waste contribution, due to a weaker year for ATM. As third-party approval is required, there is scope for some contribution slippage here. However, in the context of our c £92m existing FY19 group EBIT estimate, this is unlikely to be material in our view.
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