Waste Management confident there's plenty of brass

Kim Ellis says the new acquisitions are producing excellent returns. Picture / Martin Sykes

Talk of an economic slowdown isn't worrying Waste Management, which expects the momentum buoying its full-year earnings to continue into the next year.

Net profit for the landfill and rubbish collection company rose $5.9 million, or 24 per cent, to $30.7 million, topped by a second-half dividend of 15.8c, bringing the year's total to 30.8c.

Higher landfill disposal prices and the closure of a rival landfill during the year helped drive the increase, enhanced by steady gains in its Australian operations.

Despite slowing economies on both sides of the Tasman, managing director Kim Ellis was confident earnings would keep improving in the year ahead.

The big question mark, however, was if this was the year Waste Management would make a quantum step in Australia, where it has invested $80 million on mostly small to medium-sized acquisitions in the past four years.

Ellis said the sale of Australia's largest waste disposal business, Cleanaway Australia, would be the year's "king opportunity" for a bigger bite of that market.

Waste Management would be a bidder for Cleanaway, put on the block by Brambles, with a buyer expected to be named by June.

Ellis pitched Waste Management's chances at "20 per cent" against private equity players, but he thought they were wising up to the difficulties of valuing the business.

The company also had its eye on the sale of WSN Environmental Solutions by the New South Wales Government. Valued at A$250 million ($271 million), the sale of its 10 waste recycling, processing and disposal facilities is expected in the second half.

"It's this sort of shake-up that benefits us," said Ellis. "The hardest thing for us is a stable market."

Trading profits from Waste Management's Australian division rose 78 per cent over the year.

The company's year-old landfill at Inkerman, south of Adelaide - its biggest opportunity in Australia so far - was still a "sub-performing entity" but was picking up with a slight improvement in the second half. Back home, good growth in Auckland landfill volumes and pricing and the contribution from the Kate Valley landfill in Christchurch since June drove the strong local performance.

Collection revenue was up $15.4 million, or 12 per cent, to $147.7 million and disposal revenue rose $5.2 million, or 16 per cent, to $38.2 million.

New businesses worth $6.4 million in Auckland, Bay of Plenty and Australia, bought during the year, were delivering "excellent returns" and a further $4.1 million had been spent on acquisitions since balance date.

Waste Management shares closed up 5c yesterday at $6.45, against a year high of $6.80.