Envirowaste lifts 2015 profit 50% as Mastagard purchase, expanding population drive revenue

Thursday 16th June 2016

Envirowaste Services, New Zealand's second-biggest waste management firm, boosted annual profit 50 percent as its Mastagard acquisition and a growing population helped lift sales.

Net profit rose to $8.9 million in calendar 2015 from $5.9 million a year earlier, financial statements lodged with the Companies Office show. Revenue rose 12 percent to $226 million in the year, which chief financial officer Jason Miles said was a combination of the first full year of Mastagard contributing to sales and the increased demand for waste management that comes with a growing population.

"Part of that growth was our acquisition of Mastagard in Christchurch in early to mid-2014," Miles told BusinessDesk. "We’ve got the flow-through of full-year revenue of that business, and it’s enabled us to further invest in a Christchurch transfer station on top of that."

Envirowaste bought Mastagard for $21.1 million in May 2014, just over a year after the Auckland-based waste management firm was itself purchased by Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings for $492 million. Since 2013, the company's workforce has climbed to about 800 from 600 at the time of the takeover.

Miles said the Mastagard acquisition turned Envirowaste into "a pretty large player" in Christchurch, which has needed major waste management services since a series of earthquakes through 2010 and 2011 leveled the city and led to a major reconstruction phase.

The waste management firm's 2015 revenue was bolstered by increased building activity in Auckland, Tauranga and Hamilton, he said. That was through extra demand from a growing population and also construction waste disposed of at Enivrowaste's clean fill sites, for refuse which won't damage the environment.

“The population growth in that area that creates more households and more waste from households,” Miles said. “The last couple of years have seen very strong and robust economic growth.”

Envirowaste's 2016 revenue growth is tracking at roughly the same pace as last year: “It’s almost going to be a similar level around that 10 to 12 percent by the looks of it.”

Larger rival Waste Management NZ is going through a capital restructure where its owner Beijing Capital Group will pour a controlling stake into a Hong Kong-listed entity it also controls in a transaction that values it US$470.9 million, or 3.06 billion Chinese yuan, compared to the NZ$950 million, or 5.17 billion yuan, the Chinese state-owned enterprise paid in 2014.

Waste Management NZ parent Beijing Capital Group NZ Investment Holding generated a profit of $13.9 million on $444.8 million of revenue in the 12 months ended Dec. 31. During the year the company bought the 50 percent of Living Earth it didn't already own for $18.6 million, Gordies Bins for $2.3 million, and Waste Services Marlborough for $2.5 million.

BusinessDesk.co.nz

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