FTSE 250 listed Biffa remained confident of recovery despite reporting an annual loss

Summary

  • The pre-tax losses of BIFF came out to be negative £52.8 million during FY21 against a pretax profit of £56.4 million made during FY20.
  • BIFF had shown a revenue decline of around 10.4% during FY21 as compared to FY20.
  • BIFF achieved just 50% of Q1 FY20 volume during the first quarter of FY21 for the collection segment.

Biffa PLC (LON: BIFF) is an industrial stock listed on the London stock exchange. BIFF’s shares have generated a return of 22.91% in the last 12 months. It is listed on the FTSE 250 index.

Company Overview

Biffa PLC is a UK based waste management Company engaged in services such as collections, landfill, and special waste management services to commercial and industrial clients across the UK. Moreover, BIFF operates across two broader business divisions – Resource Recovery & Treatment and Energy Segment.

FY21 Results Review (for the 52 weeks ended 26 March 2021 as of 01 June 2021)

Weak Top-Line & Bottom-Line performance – Biffa had shown a disappointing top-line business performance as it had experienced a revenue reduction of around £121.1 million (approximately 10.4%) to £1,042.0 million on a statutory basis, adversely impacted by the Covid-19 pandemic. Moreover, on the profitability front, the Company had swung to losses as pre-tax losses came out to be negative £52.8 million during FY21 against a pretax profit of £56.4 million made during FY20. Furthermore, the turnaround was due to several adjusted items related to the uplift of the onerous contract provisions, the adverse impact of the real discount rate on provisions and the rise in amortization of intangible assets. 

Decent recovery across both divisions – The Collection segment had shown a gradual recovery as BIFF achieved just 50% of Q1 FY20 volume during the first quarter of FY21. Moreover, the recovery accelerated towards the end of the year as FY21 volumes remained around 82% of the FY20 levels. Subsequently, the volume across the Resources & Energy division also recovered and reached 80% of the prior year levels during FY21. The collections business was heavily impacted by the temporary closures of several Industrial & Commercial clients during Q1 FY21.

Successful targeting of the Small to Medium Enterprise (SME) market – The I&C (Industrial & Commercial) business segment had achieved decent results driven by robust targeting of SME volumes through the Telesales service and new e-commerce platform.

One Year Chart

(Data Source: REFINITIV)

BIFF shares were trading at GBX 303.66 and were up by close to 3.82% as of 01 June 2021 at 03:07 PM GMT. The 14-day RSI stood at ~73.79, while the 20-day simple moving average was around GBX 279.98. BIFF’s 52-week Low and High were GBX 188.20 and GBX 321.00, respectively. Biffa PLC had a market capitalization of around £893.90 million.

Business Outlook

Biffa had admitted that highly synergistic acquisition would remain the leading driver for long-term business growth. The acquisition of Viridor’s collections business would strengthen the existing I&C platform of the Company across the UK. Moreover, BIFF would look to expand the SME customer base through the successful integration of CSG in FY21.

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