FY23 Half-Year Results - Media Release



Growing EBIT across all segments and building momentum into 2023

Cleanaway Waste Management Limited (“Cleanaway”) ASX:CWY today announces a Statutory Net Profit of  $49.0 million for the six months ended 31 December 2022 (“H1FY23”), down 6.7% on the prior corresponding period (“pcp” or “H1FY22”). Underlying Net Profit of $66.9 million was $17.9 million higher than Statutory Net Profit predominantly due to adjustments for costs associated with the outage at a medical waste facility together with the GRL acquisition and integration costs.


Financial Performance

  • Strong revenue growth across all segments reflecting business growth and contractual price increases
  • Full period contribution from SRN and initial four-month contribution from GRL
  • EBIT growth across all segments versus 2HFY22 with further momentum building into H2FY23


  • Continued to embed safety and environment as foundations
  • Focus on safely serving customer using all available labour
  • Good progress on lowering job vacancies
  • Significant contracts with Santos and ExxonMobil secured and growing pipeline of opportunities


  • BluePrint 2030 strategy execution
  • Continued to build-out growth platforms
  • Operational Excellence blueprints delivering now
    • Landfill gas capture program delivering financial and environmental benefits
    • Developing and rolling out core processe
  • Strong support for approximately $400 million equity raise
  • Completed GRL acquisition


Financial Performance Snapshot

H1FY23 H1FY22 Variance
Net revenue ($m) 1,471.1 1,229.9 19.6%
Underlying EBITDA ($m) 322.2 273.7 17.7%
Underlying EBIT ($m) 138.3 129.9 6.5%
Underlying Net profit after tax ($m) 66.9 76.3 (12.3%)
Underlying Earnings per share (cents) 3.0 3.6 (16.7%)
Cash flow from operating activities ($m) 203.4 223.6 (9.0%)
Interim dividend (cents per share) 2.45 2.45

Net Revenue of $1,471 million was 19.6% higher than the pcp with higher revenue across all segments primarily driven by recent acquisitions (SRN and GRL), price increases and a general recovery in economic conditions partially offset by lower commodity (OCC) revenue.

Underlying EBITDA of $322.2 million was 17.7% higher than the pcp reflecting the full period contribution from SRN and initial four-month contribution from GRL together with a stronger contribution from most landfills. This was partially offset by lower OCC prices, the residual effect of the Queensland floods including lost earnings resulting from the temporary closure of the New Chum landfill, higher labour, energy and fuel costs and higher working costs in the Health Services business resulting from the loss of the hammer mill clinical waste processing facility in the prior half.

Underlying EBIT of $138.3 million was 6.5% higher than the pcp and reflects higher EBITDA and an increase in landfill related depreciation and amortisation expenses.

Underlying earnings per share (“EPS”) attributable to ordinary equity holders of 3.0 cents per share (“cps”) was 16.7% lower than the pcp, reflecting the lower profit and higher number of shares on issue following the equity raise in August and September 2022.

Net cash from operating activities decreased by $20.2 million to $203.4 million compared to H1FY22, reflecting higher underlying EBITDA more than offset by cash outflows attributable to underlying adjustments and higher interest payments and an increase in working capital. This resulted in a cash conversion ratio of 92.4%. Adjusting for the cash flow associated with underlying adjustments and a New Zealand tax matter related to 2011, net operating cash flow would have increased by $22.7 million or 9.7% to $257.9 million.

The Board declared an interim unfranked dividend of 2.45 cps, in line with the pcp.

Management Commentary

Chief Executive Officer and Managing Director of Cleanaway, Mark Schubert, said, “I am proud to report Cleanaway’s performance for the six months ended 31 December 2022, and pleased that during the year we made good operational and strategic progress, including:

  • Delivering strong underlying revenue, EBITDA and EBIT growth compared with the prior corresponding period
  • Completing the acquisition of the GRL business in Sydney and well-supported associated equity raise, which has immediately contributed to earnings
  • Growing EBIT across each segment compared with the second half of FY22 and building momentum into 2023 and beyond
  • Continuing to recover cost increases through our contractual mechanisms with strategies in place to improve labour efficiency
  • Continuing to execute our Blueprint 2030 strategy through advancing our growth platforms and delivering operational excellence initiatives that will expand our margins
  • Delivering significant landfill gas capture efficiency improvements in pursuit of our COP-26 aligned methane reduction targets“

“Over the last 6 months we have embedded new HS&E capability and our team has rapidly developed an HS&E strategy and intensive improvement roadmap focused on three key areas.
Firstly, improved critical risk management. Secondly, growing leadership capability and safety culture and finally, embedding a learner’s mindset.

Our lagging safety indicators are not where we want them to be with our TRIFR on 31 December 2022 at 4.7 compared to 4.2 six months earlier. Our improved reporting now provides a richer data set for deeper learning, which in turn enables a less reactive approach and an ability to tune our strategies and processes and improve our controls.

We have installed new capability to ensure we evolve our culture and grow our capability to deliver Blueprint 2030. Our people strategy is designed to embed the reinforcing mechanics that will support a Cleanaway culture where our 300 branches are at the centre of our company with capable leaders, local ownership, care, connection and a view well beyond today.

Our Executive Leadership Team has been refreshed and is now more inclusive. Pleasingly our female participation rate is steadily improving and in the six months to 31 December increased from 20.8% to 22.5%. We now have substantially greater female representation at the executive and leadership level, with 38% of CEO + 2 roles held by women – up from 31% 12 months ago.

In the context of the headwinds from the Queensland and Health Services business units, lower OCC prices and inflation, Cleanaway delivered a strong financial performance.

The company reported underlying net profit after tax of $66.9 million, 12.3% lower than the prior corresponding period, translating to earnings of 3.0 cents per share. On a statutory basis, net profit after tax of $49.0 million was 6.7% lower than the prior corresponding period, largely reflecting costs associated with alternative clinical waste disposal following a fire at our Victorian hammer mill and GRL acquisition and integration costs.

During the period, we prioritised safely servicing the customer with available labour. That meant using more overtime and more expensive labour hire to supplement our general workforce leading to higher costs and hence lower margins.

We have implemented several near-term and short-term strategies to address the challenges. These include the commencement of the Recruitment Process Outsourcing program, the continued success of the Women’s driver academy through which we have trained and recruited 92 new drivers.

We are also in the process of establishing a “Runner-to-Driver” academy and have established branch-level daily labour value drivers to track and improve performance.

Against this backdrop, it was pleasing that we were able to grow net revenue by 19.6% to $1,471.1 million and underlying EBITDA by 17.7% to $322.2 million and underlying EBIT by 6.5% to $138.3 million.”


An interim dividend of 2.45 cents per share (pcp: 2.45 cents per share) has been declared. The dividend will be unfranked and paid on 6 April 2023 to shareholders on the register on 7 March 2023.

The Dividend Reinvestment Plan (DRP) will be in operation for this dividend. Shareholders residing in Australia or New Zealand may elect to participate in the DRP. The DRP election date is 8 March 2023. Under the DRP, Cleanaway shares will be issued at the average of the daily Volume Weighted Average Price (VWAP) of all shares sold on ASX over the period from 9 March to 15 March 2023. No discount will be applied to shares issued under the DRP.

Cleanaway is eligible to participate in the Commonwealth Government’s Instant Asset Write Off Scheme, which is forecast to reduce tax payments made by the Group in FY23 and FY24. Because of lower Australian tax payments resulting from the Instant Asset Write Off Scheme, Cleanaway does not expect to resume franking dividends fully until December 2024.


Underlying Segment Performance

Solid Waste Services

Solid Waste Services (SWS) net revenue increased 24.4% or $203.6 million to $1,038.0 million. Underlying EBITDA increased 28.1% or $58.8 million to $267.9 million, and underlying EBIT increased 16.4% or $17.5 million to $124.5 million.

We completed the acquisition of Global Renewables Holdings Pty Ltd (GRL) on 31 August 2022. GRL operates a facility that processes approximately 220kt p.a of Sydney’s ‘red bin’ putrescible waste.

GRL contributed $8.0 million EBITDA and $6.8 million EBIT during the initial four-month period of ownership and is performing in line with expectations. The asset is strategically located and is currently delivering >30% landfill diversion. During the period the operational team undertook trials at the facility with further analysis underway to determine the optimal transition plan for the facility as it prepares to capture the emerging Sydney FOGO opportunity.

Solid Waste Services revenue also benefited from a full six-months contribution from the Sydney Resource Network assets, increased activity and contractual price increases to capture higher input costs. This was partially offset by lower OCC prices, higher labour costs and continued upward pressure on fuel prices.

Labour costs were higher due to greater use of overtime and sub-contractors resulting from the tight labour market, absenteeism and elevated job vacancies. Towards the end of the period the recruitment process outsourcing (RPO) program began to gain traction as vacant positions were filled.

The temporary closure of the New Chum landfill in Queensland together with the operational impacts resulting from the floods in the first half of 2022 adversely affected the business. The associated fleet replacement program is nearing completion.

We commenced ground works on the Western Sydney MRF with the facility expected to be operational towards the end of FY24.

Liquid Waste & Health Services

Liquid Waste & Health Services revenue increased 10.1% to $306.1 million, underlying EBITDA decreased 9.6% to $48.3 million and underlying EBIT decreased 15.6% to $26.6 million.

While underlying EBITDA and EBIT margins decreased 340 and 260 basis points respectively to 15.8% and 8.7% compared to the prior corresponding period, they improved by 10 and 80 basis points respectively compared with the immediate prior half.

The Liquids and Technical Services (LTS) business realised strong revenue growth with positive momentum across the business particularly in Victoria and Queensland. Price increases were implemented to reflect increasing input costs. The return of cruise lines and hospitality has resulted in growth across oily water and grease trap volumes.

Higher costs due to poor labour availability and higher equipment repair and maintenance costs, together with less infrastructure related project work resulted in slightly lower EBITDA.

From an underlying EBITDA perspective, the Hydrocarbons business performed broadly in line with the prior corresponding period. Strong revenue growth resulted from higher post collections volumes and prices, and growth in servicing through Cleanaway Equipment Services (CES). This was offset by higher natural gas and diesel input costs and higher freight and labour costs.

The Health Services business revenue was broadly in line with the prior corresponding period due to lower COVID related clinical waste from hotel quarantine, hospital and vaccination clinics and aged care centres, offset by cost recoveries from hospitals and increases in revenue from biosecurity and cruise ships as the travel sector rebounds.

Network inefficiencies resulted from the loss of the hammer mill waste processing facility in Victoria due to a fire in June 2022, and together with higher gas, labour and diesel costs resulted in significantly lower EBITDA.

Draft EPA approval for our Victorian autoclaves, a replacement solution for the hammer mill, was granted recently and they are expected to be operational in Q4 FY23.

By the end of the period there was a significant reduction in the volume of COVID related waste, which will reduce the impact on the network and allow for improved operational efficiency.

Industrial & Waste Services

Industrial & Waste Services (IWS) increased revenue, underlying EBITDA and underlying EBIT by 11.8%, 7.6% and 17.0% respectively.

Revenue was $182.6 million with strong performances across all regions driven by increased activity with existing customers and new contract wins.

EBITDA of $25.4 million reflected strong contract management, increased activity at existing sites, new contracts and negotiated price increases to somewhat offset cost pressures. Persistent cost inflation compressed EBITDA margins.

Underlying EBIT increased by $1.8 million to $12.4 million and underlying EBIT margin expanded 30 basis points to 6.8% reflecting the underlying EBITDA outcome and broadly steady depreciation and amortisation expenses.

The segment continued to deliver a strong customer re-sign and win rate. Our strategy to increase presence in the Oil & Gas sector is proving to be successful with significant contracts with Santos and ExxonMobil secured during the period.

We also extended a contract with BHP at Olympic Dam and successfully tendered for a Snowy 2.0 contract with a further opportunity to extend the contract in the future.

FY23 Outlook

We expect underlying growth and ongoing execution of Blueprint 2030 initiatives, together with a full year contribution from SRN and an initial contribution from GRL, to deliver higher earnings in FY23 than FY22.

Consistent with our prior expectations, FY23 underlying EBITDA including GRL is expected to be approximately $670 million.

Compared with the first half, the second half assumes:

  • similar post collections volumes,
  • a partial recovery in OCC margin – both recovering the rebate lag and price recovery,
  • general margin improvement through contractual prices increases,
  • further improvement in labour availability and efficiency, and
  • successfully commissioning the Victorian autoclaves

We also assume no material change to prevailing market and economic conditions.

We expect depreciation and amortisation to be approximately $370 million, which should result in EBIT of approximately $300 million.



Investor Briefing

The Company will be holding an investor and analyst briefing on the results at 9.30am (AEDT) today.
Presenters: Mr Mark Schubert – Managing Director & Chief Executive Officer
Mr Paul Binfield – Chief Financial Officer
Tele-conference: https://s1.c-conf.com/diamondpass/10027662-fgtd5.html
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=OqQI7TNJ


Investor Relations

Richie Farrell
Head of Investor Relations
Tel: +61 409 829 014
Email: richie.farrell@cleanaway.com.au

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