Cleanaway Waste Management Cuts Annual Profit Guidance

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By David Winning
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SYDNEY–Cleanaway Waste Management Ltd. warned on profits due to rising fuel prices, higher labor costs and flood-related damage to equipment on Australia’s east coast.

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Cleanaway said it now expects earnings before interest, tax, depreciation and amortization in the year through June to be around 15 million Australian dollars (US$10.6 million) and A$20 million below prior expectations. It also said Ebitda margins in its fiscal second half would likely be lower than the previous six months.

“Rising fuel prices are expected to result in approximately A$10 million higher costs for the second half of fiscal 2022,” Cleanaway said. “Constraints on labor availability due to the pandemic continue to place pressure on the business, impacting our ability to service the customer and operate efficiently.”

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It said contracts typically allow for the company to raise prices when costs rise, but there is a time lag before any benefit is felt.

Cleanaway also said that floods had damaged property, vehicles and equipment. The temporary closure of its New Chum landfill site would likely cut A$5 million-A$7 million from net Ebitda in its fiscal second half.

“Damage to post-collections equipment in our Health Services business is expected to result in temporary increased working costs of A$5 million-A$7 million in 2H, while the continuation of high pandemic related clinical waste volumes continues to impose additional costs and inefficiencies, Cleanaway said.

Still, the company reported strong volumes in Sydney and said recent price adjustments would cushion the overall impact on profits.

Write to David Winning at [email protected]

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Credit: www.marketwatch.com /

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