How Freightways (NZX:FRE) is helping in waste sector growth?

Highlights

• Freightways focused on its plan ahead after witnessing challenges arising from COVID-19 in 2020.
• FRE's waste renewal business was impacted by the lockdown, majorly in Australia.
• The Group has invested in SaveBoard business as part of exploring new horizons for delivering high-value recyclables. 

Freightways Limited (NZX:FRE) is a package & business mail, information management and waste service provider. The Group witnessed many challenges due to COVID-19 in 2020 but saw an uptick in its business in FY21. This was majorly due to its Pricing for Effort initiative, efficiency in information management, innovating its workstreams, and growing its waste renewal business.

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FRE registered a revenue, EBITDA and an NPAT growth of 27%, 22% and 4.6%, respectively, for FY21. In addition, FRE's workforce increased by 350 after Big Chill's acquisition.

Let’s have a look at how FRE’s waste renewal business performed.

FRE's waste renewal business performance in FY21

Within the firm's waste renewal business, Shred-X offers document destruction, eDestruction and product destruction services. Shred-X is a primary light for waste renewal in Australia. FRE also offers medical waste collection and processing services under the Med-X brand.

Freightways' waste renewal business was affected by lockdowns, especially in Melbourne, but FRE still found innovative ways to grow that part of the business.

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In FY21, FRE increased its market share in courier and waste businesses. Medical waste growth in Australia is an excellent example of development through innovation. For example, Med-X had a $3 million turnover when FRE brought it in four years ago. It currently makes $16 million in profit.

The Group witnessed a bounce back in its NZ business after lockdowns saw FRE's volumes return to the 2019 levels.

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Waste renewal has a lot of benefits. FRE is already making significant progress in collecting items to remove them from landfills, in addition to document destruction and medical waste. SaveBoard is an excellent illustration of how waste materials may be converted with the proper technology and the ability to pick up and distribute the feedstock via FRE's client network.

FRE's Shred-X business is also switching from document destruction to waste renewal by taking up high-value recycling prospects.

On 30 September, at the time of writing, FRE was trading at $12.77, up 0.79%.

Outlook ahead

FRE has actively practised plastic recycling to reduce waste from its operations, and the Group has a target of a 70% decrease in the use of plastic packaging.

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It expects the collection and processing of medical waste to continue growing.

FRE has invested in the SaveBoard business, a new venture that will see the houses of the future made from building materials upcycled from waste such as beverage cartons, soft plastics and coffee cups. It is booked for its first production run in late 2021.

The Group is also increasingly involved with collecting other higher-value commodities, such as textiles and plastics.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)