Waste Management sees nothing but sun

By ELLEN READ

"There's nothing really out there as a black cloud for us," said Waste Management chief executive Kim Ellis yesterday as he unveiled a solid profit for last year and forecast more of the same.

The company posted a net after-tax profit of $15 million for the year to December 31, up 15 per cent on the previous year.

"It was a very balanced year. We didn't have any dog divisions or any special projects propping things up," Ellis said.

A strong recovery in the Auckland waste collection market, a full year of contributions from Australia, sustainable price increases at the Redvale landfill and a full year of profitable trading at the Tirohia landfill in the Waikato supported the bottom line.

The waste collection and treatment company will pay a final dividend of 8.3c a share on March 31. This brings the total dividend for the year to 10.8c a share, a 44 per cent increase on the previous year's 7.5c a share.

Shares in Waste Management rallied on the release, closing 15c higher at $3.05.

The result was based on total operating revenue of $164 million, compared with $154 million in the previous year.

Earnings per share increased to 15.3c, from 13.4c.

Strong operating cash flows and a foreign exchange gain helped the company reduce total debt by $11.7 million to $53.1 million.

That left it well placed to fund further growth opportunities in the coming year, Ellis said.

He said Waste Management was committed to expanding overseas through organic growth and via acquisitions in Australia.

It is also looking at potential landfill and landfill gas-to-energy projects in Asia.

Ellis said the company had signed an option agreement for the purchase of properties and consents for a transfer station and landfill in the Adelaide market.

Due diligence and market evaluation were being done; the option period would expire on June 30.

In the resource recovery sector, joint venture partner Living Earth performed to budget - a budget which is not disclosed as Living Earth is a private company.

While unable to give financial impacts yet, Waste Management continues to collect and release information on its social and environmental impacts.

The company is in its third year of reporting on these issues and is building a database against which to measure its performance.

"Our business has to be a good citizen. Because we're in the waste game people assume we're a nasty noxious beast but you can't drive your way through life by running over other people," Ellis said. A good company took care not only of shareholders but of those other areas too, he said.

Ellis said Waste Management was mindful of changing community attitudes and public policy-making on resource consumption and climate protection.

"The past year has seen us make steady progress in the pursuit of our strategy to become a 'value-adding' business - to recover for re-use more and more materials and substances previously regarded as wastes to be thrown away."

However trade in carbon credits was a complicating factor, he said.

At Waste Management's Redvale and Whitford landfills, the captured landfill gas is used by four 1MW generators to produce enough electricity to power around 3000 homes.

"This energy recovery project provides additional commercial opportunity for the company in the sale of emission credits to other businesses," Ellis said.

Such trading was provided for under the Kyoto Protocol and Waste Management had secured a trade with a Northern Hemisphere business.

However, the Government was considering a policy that would limit such deals.