Cashing in on rubbish

Managing director Kim Ellis sees Australia as Waste Management's growth area. Picture / Martin Sykes

Waste Management shareholders are in line for a $26.5 million dividend bonanza, reaping the gains from the company's recent acquisitions, higher prices and buoyant sales.

New Zealand's largest waste collection and disposal business yesterday doubled its second-half dividend to 16.7c a share, boosting its full-year pay out by 10.8c.

Full-year net profits rose from $18.5 million to $25.6 million

The market reacted favourably to the news sending the share price up 33c to close at a record high of $6.44.

The shares have been trading between $4.10 and $6.11 during the past year.

Company chairman Jim Syme said: "The dividend decision reflects our belief that the business is doing well and is continuing to gain momentum."

Managing director Kim Ellis predicted the growth would continue this year as contributions from the company's one-month-old landfill in Adelaide, Australia, and the Canterbury regional landfill at Kate Valley, due to be finished mid-year, were added.

"We've got the benefit of Adelaide to come this year and Kate Valley looks like it's probably going to be an even better business than previously thought," he said.

An expanding economy had boosted demand for the garbage-hauling business locally and, teamed with higher prices at its landfills, had helped push its sales over $200 million for the first time.

Nearly half of the increase in revenue came from acquisitions, of which the company made seven last year.

More acquisitions were expected to be made here and in Australia in the year ahead.

Waste Management crossed the Tasman four years ago and has since made 15 small to medium-sized acquisitions in Brisbane, Melbourne, Queensland and Albury in New South Wales.

It biggest has been at Inkerman, 85km south of Adelaide, where it opened a new landfill and transfer station last month.

Total investment in Australia is about A$80 million ($87.7 million) and it is only now that Adelaide-born Ellis, who has been with the company since 1993, is starting to feel comfortable there.

"It feels like home now, it's just an extension of the New Zealand market - but we've only got a toe-hold," he said.

"This is the growing year for acquisitions."

The strong full-year result showed the company closing in on its goal of widely having its Australian operations contributing 25 per cent of operating profit by the end of next year.

"We feel we're heading well towards that this year and will certainly exceed that next year," said Ellis.

'There's no doubt Australia holds the greatest growth potential for us overall.

"But, market conditions over the past year have been buoyant and Australia can be a tough and, at times, unpredictable market, so the board is conscious that while generally things have gone to plan, this is certainly no time for complacency.

"Cool heads and solid strategies are vital."