Cleanaway Waste Management cuts its annual profit forecast

By David Winning

SYDNEY – Cleanaway Waste Management Ltd. warned of profits from rising fuel prices, rising labor costs and damage to equipment from flooding on Australia’s east coast.

Cleanaway said it now expects earnings before interest, tax, depreciation and amortization for the year to June to be around AUD15 million ($10.6 million) and A$20 million lower than previous expectations. He also said Ebitda margins in its fiscal second half would likely be lower than in the prior six months.

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

He said contracts generally allow the company to raise prices when costs rise, but there is a delay before any benefit is felt.

Cleanaway also said the flooding damaged property, vehicles and equipment. The temporary closure of its New Chum landfill would likely reduce Net EBITDA by A$5-7 million in its fiscal second half.

“Damage to post-collection equipment in our Healthcare business is expected to cause a temporary increase in operating costs of A$5-7 million in 2H, while the continued high volumes of clinical waste related to the pandemic continue to impact ‘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 earnings.

Write to David Winning at [email protected]

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