(Alliance News) - Waste and recycling firm Biffa PLC on Wednesday said its Industrial & Commercial division has been the hardest hit by Covid-19, with revenue down to only around half of what it was before the virus pandemic.
The impact of the health crisis on different Biffa businesses has been mixed, with Municipal business revenue still stable despite higher employee absence, while the Industrial & Commercial arm has taken an approximately 50% revenue hit compared to pre-Covid-19 levels.
"The Industrial & Commercial division has continued to serve customers providing essential services such as food manufacture and retail, distribution, health and utilities. It is however the most severely impacted part of Biffa's business, with almost all revenues from customers affected by the lockdown ceasing for the time being, across sectors including hospitality, leisure, transport and non-food retail," said Biffa.
Biffa's Resources & energy division has had a more varied performance, with its landfill operations revenue dropping around 50% due to a slowdown in the construction industry while other areas "are holding up well".
In a bid to protect the company's "financial strength", Biffa is rightsizing its Industrial & Commercial operations though the re-routing of trucks and the removal of around 40% of its frontline fleet off the road. Approximately 40% of Industrial & Commercial employees are to be furloughed under the UK's coronavirus job retention scheme
Biffa will also be "reducing cash outflows wherever possible" and putting various "remuneration-related measures" in place.
On March 27, the end of the company's financial year, Biffa had available liquidity in excess of GBP150 million and said it is "well placed to weather these unprecedented trading conditions".
Further, Biffa has obtained covenant amendments and further liquidity headroom. This includes an amended net debt to earnings before interest, tax, depreciation, and amortisation covenant of 5.5 times for the first half of its 2021 financial year, versus 3.5% previously.
The firm will be given a 30% covenant headroom over and above its forecast profit run rate so as "to cater for the current lack of visibility around the post lockdown run rate of profitability". It has also agreed in principle a further GBP60 million committed liquidity headroom facility with its banks if necessary.
Biffa said: "Following receipt of an investment grade rating from one of the rating providers, the group also has an opportunity to access the government's coronavirus corporate finance facility commercial paper programme and is actively working with the Bank of England to pursue this opportunity.
"The board is encouraged with the progress that the group has made in a short period of time and would like to extend its thanks to the entire Biffa team for their exceptional response to the coronavirus crisis. As a result of these ongoing efforts, the board remains confident that as the year progresses, it will be able to refocus on delivering its strategic growth plans and sustainability strategy."
Biffa has postponed the posting of its annual results to June 5 from May 27, in line with regulatory guidance.
Shares in Biffa were up 2.6% at 218.06 pence in London on Wednesday morning.
By Anna Farley; annafarley@alliancenews.com
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