The Cleanaway Waste Management Ltd (ASX: CWY) share price has tanked more than 13% in early trade following the company's annual general meeting (AGM).
What was announced at the Cleanaway AGM?
Ahead of its AGM, Cleanaway has cautioned shareholders that first half earnings could be softer for FY20. The company cited lower economic activity, soft commodity prices, and lower volumes in Queensland due to a new landfill levy as weighing factors.
The waste management group expects earnings in the first half of FY20 to be in line with the first half of FY19. Despite the soft forecast, Cleanaway expects earnings in the second half of FY20 to be stronger than the first half of FY20 and the corresponding second half of FY19.
Cleanaway chief executive Vik Bansal reassured shareholders that all 3 of the company's operating segments (solid waste, industrial waste and health services) in addition to pricing and cost reductions would result in stronger full-year earnings for FY20.
Mr Bansal also emphasised the potential in Cleanaway's recent acquisition of SKM Recycling assets, which is the largest processor of recyclable household material in Victoria. In his address to shareholders, Mr Bansal stated that "their [SKM's] economic model was centred around being a manufacturer, rather than a waste manager." According to Mr Bansal, "by purchasing their [SKM's] assets, Cleanaway is now working with councils to provide them with a correctly priced solution to their kerbside co-mingled waste."
How has Cleanaway performed?
Cleanaway is Australia's leading sustainable waste management company servicing a wide range of customers. The company experienced a strong year of financial growth in FY19, with all 3 operating segments experiencing growth in revenue and earnings. Group net revenue increased by 34.8% for the year to $2.1 billion and EBIT rose 44.7% to $240.8 million.
Earlier this month, Cleanaway announced that the company had successfully bid for the SKM Recycling assets. The acquisition allows Cleanaway to add 5 more recycling sites to its current network and to take advantage of growing opportunities in the changing recycling sector.
At the time of writing the Cleanaway share price has recovered to be down 13% for the day after trading down nearly 24% earlier.
