Cleanaway Waste Management Ltd (ASX: CWY) delivered a solid result, once again proving that both recycling and waste disposal are among the most defensive businesses in the world.
Before we dig into the results, here’s a video I recorded with Owen Raszkiewicz last week. We covered four of the most popular ASX reports of the week. Stay tuned for our next video on Rask Media this Friday.
My take on the Cleanaway result
As noted by CEO Vik Bansal, COVID was able to “highlight the defensive characteristics of our revenue streams”.
Cleanaway reported a small increase in revenue by 2.1% to $2.3 billion. The core Solid Waste division grew revenue by 0.8% and the expanded Liquid Waste & Healthcare Services increased 3.8%, offsetting a slowdown in the more specialised and lower-margin Industrial and Waste division, down 8.4%.
The result was an 8.7% increase in profit on an underlying basis to $153 million and a 10% increase in the final dividend to 2.1 cents per share. This takes full-year dividends to 4.1 cents per share, up 15% compared to FY19.
Management continues to push forward on its strategy to consolidate an extremely fragmented industry, delivering stronger profit margins in the process, moving 0.6% higher to 12%, as the company gains additional efficiencies.
The acquisitions of Toxfree and SKM have been successfully integrated, with the company now turning to cleaning up its landfill stations and improving recycling capacity using its $230 million in free cash flow.
My take: Progress being made in integration, recycling tailwind to continue.
In related news, competitor Bingo Industries Ltd (ASX: BIN) delivered its full-year results yesterday, with shares finishing nearly 13% higher.