In its exclusive report on the waste and resources industry for CIWM, Catalyst Corporate Finance has revealed that the 10 largest companies in the sector have delivered higher revenues than last year, with four of them showing growth of more than 10 percent.
Catalyst, an international corporate finance advisor, compiled a report on the largest companies in the sector based on their UK waste and resource management activities.
Catalyst Corporate Finance – “Given the complexity of the waste industry today it is unsurprising that a number of themes have shaped the Top 20 list this year… Another important theme is the rise of the circular economy as a foundation on which companies are basing their strategies”
The top five waste and resources companies remained the same as Catalyst’s previous analysis last year: Veolia Environmental Services, Biffa Group, Viridor (Pennon Group), SITA UK (Suez) and FCC Environment, but with SITA and Viridor switching places, while Tradebe, Reconomy and Global Renewables enter the top 20 for the first time.
Explaining the findings, Mark Wilson, partner, and Robert Pearce, head of research at Catalyst Corporate Finance, wrote: “Given the complexity of the waste industry today it is unsurprising that a number of themes have shaped the Top 20 list this year.
“First, many of the business unit restructuring and efficiency programmes have either been completed or are well underway and have resulted in the 10 largest companies collectively generating significantly higher revenues than last year (+4.3 percent) with Viridor, FCC Environment, Cory and DCC Waste delivering growth above 10 percent.
“The next 10 players, generally the privately owned businesses, have continued to deliver a combined growth of just under nine percent with Tradebe, Reconomy and AMEC’s subsidiary, Global Renewables, entering the list for the first time. PHS notably contracted and this year sold its commercial and industrial (C&I) operations to Biffa.
“Another important theme is the rise of the circular economy as a foundation on which companies are basing their strategies. SITA has outlined criteria that will drive its business, including increasing the volumes of waste recycled back into the economy and producing more renewable energy. Viridor has, for example, increased profits from recycling operations by 75 percent in the last year. Taking the concept even further, Veolia’s Imagine 2050 report captured a vision of bin-less homes with a strategy which moves away from waste management and recycling to manufacturing products for the circular economy.
“It was also a big year of news and investment within energy from waste (EfW) and a vibrant debate emerged around future capacity. SITA published its Mind the Gap report, which claimed that the UK must invest up to £25bn in new waste treatment plants by 2025, a view supported by CIWM and Veolia. Eunomia, however, re-issued its Residual Waste Infrastructure Review in June, warning of the risk of EfW overcapacity. Defra also concluded that there is now enough infrastructure, partially explaining its decision to withdraw £169m of PFI credits for the proposed 250ktpa Cory incinerator in Norfolk. The Green Investment Bank has now countered this position, and recognises the gap that needs to be filled.”
Wilson concuded: “Overall, we expect merger and acquisition activity to remain resilient over the next year, with interest from overseas investors and private equity attracted to companies focused on renewable energy, maximising recyclate values and accessing long term fuel supply. Over the course of the next 18 months more than 37 local authority contracts will be renewed, which includes almost 1m tpa of recyclate, a substantially larger volume than normal. We anticipate that the bidding process for these contracts could contribute to more consolidation in the market.”