What do Veolia, Sita, WRG and waste have in common? They are all reflecting the credit crunch. Company reports, waste data flow and Landfill Allowance Trading Scheme (LATs) information all show that quantities of waste, and profits from waste management, are falling fast.
LATS
Champion campaigner and expert waste statistician Keith Kondakor explains:
UK waste going to landfill is taxed at a standard rate or low rate for inert matter. The tax take is reported each month but operators pay every 3 months, so you need to add 3 months totals to get a quarters tonnages.
UK Trade Info is the part of HM Revenue & Customs (HMRC) responsible for producing trade statistics. These statistics record the movement of visible goods between the UK and both EU and non-EU countries.
And the headline news from UK Trade Info?
In the last quarter of 2008 waste to landfill fell 21% with the standard rate waste falling at 14%.
Waste Data Flow
Waste handled by local councils is reported into a system called wastedataflow. This information show total Municipal Solid Waste (MSW) in England is falling at 3.35% as of the year to September 2008. This is before the worst of the downturn in the landfill tax take.
Most of the big waste contracts are based on 1% to 3% waste growth every year – so the big fall is going to lead to councils paying for burner capacity well over the tonnage available.
Veolia to dispose of more assets and less waste
Veolia’s accounts for 2008 have recently been released. In the waste section there is a chart of internal growth each quarter. Q4 shows -4.5% less business than 2007 when the other quarters have been 7-9% up on 2007. This is a fall of some 13%
In Veolia’s own words:
In the current economic climate, Veolia Environnement has established the generation of positive free cash flow after the payment of dividends as its priority for 2009. To achieve this objective, the Group expects to reduce its net investments by at least €1.6 billion as compared with 2008, so that net investments in 2009 should not exceed €2 billion.
In order to internally generate the resources for growth, Veolia Environnement has expanded its asset disposal plan. Asset disposals should total €3 billion over the 2009–2011 period, with an objective of at least €1 billion in 2009, after nearly €0.8 billion in divestments already completed in 2008. In addition, measures to reduce costs in the amount of €280 million have been identified for 2009, including €180 million in connection with the “2010 Efficiency” plan and €100 million in connection with the waste management division’s plan to adapt to the current business climate.
Waste Recycling Group (WRG)
WRG’s Spanish owners have reported reduced earnings. In fact, after deprecation is taken into account, WRG is making losses.
According to LetsRecycle:
Veolia Environnement and Suez Environnement, the French parent companies of two of the UK’s largest waste management firms, have both published financial results for 2008 revealing just how the market downturn impacted on their waste operations in the last quarter of 2008.
Annual results published today (March 6) for Veolia Environnement, which owns Veolia Environmental Services in the UK, revealed that its net income was down from 928 million euros (£827 million) in 2007 to 405 million euros (£361 million) last year.
The company explained that the majority of this fall was down to its waste management business in Germany, where the process of writing off the value of its ‘goodwill’ and other intangible assets wiped 430 million euros (£383 million) off its balance sheet.
The purchase of a faulty Italian burner couldn’t have helped matters for Veolia either [1].
The division’s overall performance has been considerably affected by the economic crisis since September, with a drop in volumes processed for industrial customers in particular and a significant decrease in the prices for recyclable materials.
Sita (owned by Suez)
The LetsRecycle continues:
The effect of the downturn on its waste businesses was also made clear by Suez, which, in its results which were published on Wednesday (March 4), said: “The impact if the deterioration in the economic environment directly affects the operations for industrial and commercial customers and the recycling businesses. The observed tendency seen during the 4th quarter 2008 was reinforced during the month of January 2009,” it added, revealing that “about half of its waste revenue was impacted by the economic slowdown”.
Suez reportedly reduced its growth target for revenues and earnings to “low single digit”, and said it would accelerate its cost cutting programme, as well as implementing a “temporary slowdown” of investments (excluding strategic acquisitions), down by 25% in 2009 compared to 2008.
[1] Defective Incinerator Plant Sold to French Company
Down in Pietrasanta near Lucca in Tuscany, there is a waste incinerator plant. Formerly owned by the Italian company Termomeccanica, this plant was recently acquired from its Italian owner by the French company Veolia. Shortly after taking control of the plant, the new French owners were not all that happy to discover that the incinerator plant’s emission levels had been fiddled with to bring them within legal limits.
The police were called in and their investigations resulted in the suspension of the incinerator plant manager. Additionally, a hard disk containing software apparently written specifically to modify the reporting of emission levels was confiscated.
