Cleanaway’s new long-term strategy buys into strong low-carbon, circular economy tailwinds

Cleanaway has delivered a solid set of financials, but new boss Mark Schubert is firmly focused on the big opportunities being driven by fundamental changes in how we manage waste.

Recyclable materials being sorted at a Cleanaway facility. Picture: Eddie Safarik

Cleanaway has unveiled a strategy out to 2030 underpinned by increasing community demand for onshore recycling, low-carbon and energy-from-waste solutions, and plastics recycling, as the “circular economy” rapidly evolves from concept to reality.

The waste management and resource recovery company on Thursday reported revenue for the first half of $1.23bn, up 14.9 per cent, while underlying net profit was 3.4 per cent lower at $76.3m.

Statutory net profit fell by a third to $52.5m “predominantly due to costs associated with the acquisition and integration of the Sydney Resource Network’’ the company told the ASX.

Cleanaway acquired five transfer stations and two landfills from Suez - the Sydney Resource Network - for $501m, with the transaction completing on December 18.

The company is expecting second half EBITDA to be broadly in line with the first half, and said margins were growing across all of its segments as pandemic-related issues which impacted the business flowed through.

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In delivering the results, managing director Mark Schubert, who started in the role in August, unveiled the company’s Blueprint 2030 plan, which would build on its significant existing platform over the medium term.

Mr Schubert said there was “significant change” happening in the waste management industry, with Cleanaway well-positioned to play a leading role.

“In a relative short period, the industry has moved from a collect and dispose one to a much more complex one with far greater focus on resource recovery through the value chain,’’ he said.

“With sustainability here to stay in the form of lower carbon and higher circularity driven by customers and communities, our landscape review showed a long and exciting runway of domestic opportunities in our core markets, which we are well positioned to capture.”

Mr Schubert told News Corp Australia that as segments such as the company’s currently early-stage energy from waste division evolved, Cleanaway’s revenue stream would become even more “infrastructure-like’’.

“I think investors are excited by Cleanaway becoming more and more infrastructure-like, but it’s not infrastructure for the sake of infrastructure, it really is investing in the waste value chain really strategically, where we see significant growth opportunities for Cleanaway, but also significant opportunities to serve our customers in a really circular and low-carbon way.’’

The company is creating an “east coast energy from waste platform’’, and has bought a site in Melbourne with another in Queensland in the final stages of being acquired.

In NSW the company has a project on foot with Macquarie as a 49 per cent equity partner, which it is seeking a site for after regulatory changes which now limit such developments to defined zones.

Mr Schubert said the EFW strategy will be “a core part of our business’, and also divert household and other waste from landfill “and help turn residual waste into energy to help reduce the carbon footprint’’.

On the plastics front, the company has an established plastics reprocessing platform, but “we also have several other planned investments in the pipeline to ensure we can meet the demands for different types of polymers, and that we can do it on a national basis’’.

“As recovery rates improve through both future container deposit schemes and through better source separation, we can continue to build out this platform,’’ he said.

“We are currently working with Qenos, Australia’s only manufacturer of polyethylene and supplier of a diverse range of specialty polymers, on a feasibility study to chemically recycle mixed plastics and turn them into raw materials that are used to make new plastic polymers for a circular solution.”

The company also sees “clear opportunities to invest’’ in the food and garden organics segment.

Excluding the Sydney acquisition, the company said it expected second half EBITDA to be in line with the first half, despite there being six less working days in it.

The interim dividend was increased by 8.9 per cent to 2.45c.

Cleanaway shares were 3.7 per cent higher at $2.97 at noon.

Originally published as Cleanaway’s new long-term strategy buys into strong low-carbon, circular economy tailwinds