Waste management company Biffa (BIFF) fell 12% to 346.9p after it announced a £25 million write-off associated with the recently acquired surplus food redistributor Company Shop.
This overshadowed an otherwise decent performance from the group which resumed its dividend after narrowing its first-half losses at the pre-tax level as revenue was boosted by ‘strong’ performance in its collections and recycling business.
The fall should probably be seen in the context of a strong showing from the shares over the last 12 months, with Biffa up more than 40% over that period.
For the 26 weeks ended 24 September 2021, pre-tax losses narrowed to £25.6 million from £52.5 million year-on-year as revenue rose 39.1% to £671.2 million.
A ’strong performance in collections and recycling has been offset by the expected declining contribution from inerts and landfill,’ the company said.
Biffa resumed its interim dividend at 2.2p per share. Looking ahead, the company said its expectations for the full year remained unchanged.
GAINING MARKET SHARE IN COLLECTIONS
Chief financial officer Richard Pike told Shares that pay increases for HGV drivers have alleviated staffing shortages though acknowledged service levels dropped from the typical 98% to 99% to 94%. However, Pike also observed that customer churn is down and believes the business has picked up market share on the collections side.
Berenberg noted ‘excellent progress in the core collections business offset by a £25 million goodwill impairment from the recent Company Shop deal, and a delay in customer approvals for recycled plastics produced by the new Seaham plant.
‘While we believe both of these issues are temporary, we downgrade forecasts in the relevant sub-divisions, offsetting ahead-of-expectations performance from collections and resources & energy.’
