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Renewi sees €20m hit from Covid-19 in Q1

By Sean Farrell

Date: Friday 29 May 2020

Renewi sees €20m hit from Covid-19 in Q1

(Sharecast News) - Renewi said first-quarter earnings would be as much as €20m lower than its had expected because of Covid-19 but that it could manage the reduction comfortably.
The waste-to-product company said lockdown restrictions had affected its businesses in Belgium, the Netherlands and the UK but that volumes did not fall by as much as its scenario planned for.

The company said the impact of Covid-19 in the second half of March was €4m including a €1m bad debt provision. Based on business since the end of the financial year in March, coronavirus is likely to reduce earnings before interest and tax and cash by up to €20m.

Renewi said this outflow was easily covered by its €252m of liquidity at the end of March - higher than previously announced and including €195m of cash. It said it was prepared for an extreme scenario that would feature a renewed lockdown in the second half.

The company's shares rose 14.9% to 21.35p at 10:15 BST.

Renewi turns household waste from recycling sites into raw materials such as paper, metal, plastic and glass to reduce environmental impact. The company scrapped its final dividend in March to save €10m and is reducing capital spending and operating costs to save a further €50m in the current year.

The company said its net debt to earnings covenant has increased to 6x in the second half of the current financial year, reducing back to 3.5x in September 2021.

Renewi said: "Covid-19 may slow the progress of some customer initiatives and hence our deployment of capital in the short term, and it is likely to have some medium-term impact on the economy. However, the global climate crisis remains of an altogether larger scale and we are confident that government and society recognise that the need to address climate change and the goal to transition Europe towards a circular economy is urgent."

Executive directors and the board have taken a voluntary 20% cut in pay during lockdown and the executive committee members have taken a 10% cut. Executive bonuses for last year will be paid in shares to preserve cash and bonuses for the current year are suspended.


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