Waste Management Segment

Economic environment for the Waste Management sector

In the first six months of the 2019/2020 fiscal year, the waste management industry continued to benefit from favourable general economic conditions. In the second half of the year, however, the environmental parameters of the waste management sector showed a differentiated picture due to the COVID-19 lockdown. However, the import ban on various recyclable material fractions imposed by the Chinese Ministry of the Environment on 1 January 2018 and subsequently by other Asian countries continues to exert a strong influence on the entire waste management sector, resulting in shifts in global volume flows all told. The resulting high volumes of lower quality plastic waste ensured that all waste incineration plants across Europe continued to operate at high capacity in the reporting period.

Both nationally and internationally, the issue of responsible materials management continues to be at the centre of attention. In order to close the gap between waste management and production, mandatory requirements for reusable or recyclable product designs, including the use of secondary raw materials, are being addressed. Corresponding targets defined at European level in the form of the Circular Economy Package pose major challenges for the actors involved, for example, in the establishment of new collection and sorting channels.

The European Disposable Plastics Directive stipulates that 77% of disposable plastic bottles must be collected separately by 2025 (increasing to 90% by 2029). In Austria, the collection rate is still significantly lower than this. In order to be able to achieve the high targets nevertheless, the introduction of a deposit system for single-use bottles and beverage cans and the strengthening of reusable containers to avoid waste is the subject of political discussion.

In the case of recycling materials, a negative trend – partly due to the import restrictions explained above – continued to be observed for both scrap metal and recovered paper/cardboard in the year under review. In the case of recovered paper, the Wiesbaden Paper Index reached a historic low in March 2020, before recovering significantly in the COVID-19 lockdown months and, after volatile performance, finally ending the fiscal year slightly above the level at the start of the fiscal year. The price of scrap steel remained at a low level throughout the fiscal year and was exposed to strong fluctuations.

Business development in the Waste Management Segment

In the 2019/2020 fiscal year, sales revenues in the Waste Management Segment amounted to EUR 232.7 million, thus remaining largely stable compared with the previous year (EUR 233.5 million). EBIT increased by EUR 13.7 million to EUR 27.1 million compared with the previous year (EUR 13.4 million).

In the first half of the 2019/2020 fiscal year in particular, good price trends for commercial and industrial waste, hazardous waste and the services offered made a positive contribution to the development of sales revenues. On the other hand, the development of the recycling materials waste metal and waste paper/cardboard in particular negatively affected total sales noticeably. In order to maintain general waste management reliability, companies in the sector were exempted from plant closures due to the COVID-19 lockdown. Nevertheless, the waste management sites were not fully utilised during this period, with significant regional differences and a resulting decline in sales revenues. From July 2020 the situation eased again, both in terms of capacity utilisation and price development.

The year-on-year increase in results is largely attributable to one-time effects. On 10 October 2019, a serious explosion occurred at the Hörsching sorting plant, resulting in one death and several injuries. The buildings and the sorting plant itself were so badly damaged that a large part had to be demolished. The material damage and the additional costs incurred by the replacement sorting carried out by external third parties were covered by insurance policies. The effect on earnings of EUR 9.8 million resulting from the insurance compensation is mainly responsible for the year-on-year increase in EBIT.

Stable throughput rates at thermal plants despite COVID-19

The incineration plants at Wels and Lenzing achieved a throughput of about 623,500 tonnes of thermally processed waste. This is equivalent to a slight increase of 1.6%.

The annual plant overhaul at Lenzing took place at the beginning of the COVID-19 lockdown. It was successfully completed in compliance with strict hygiene regulations. Due to the plant shutdown at Lenzing and the lower demand for process heat in May, the thermally processed waste volume declined slightly. At the incineration plant at Wels, throughput rates were increased significantly despite COVID-19 lockdown conditions. To prevent a possible plant closure due to COVID-19 infections, a safety strategy was developed and consistently implemented. On the maintenance side, the focus was on the renewal of the refuse crane.

In the reporting period, the waste incineration plant in Wels distributed 198 GWh of heat (previous year: 186 GWh) to the district heating network of the town of Wels and to one other key account customer. Electricity procurement totalled 206 GWh (previous year: 177 GWh). The increase is attributable to the turbine overhaul carried out at 10-year intervals in the previous year.

The treatment plants for hazardous waste in Steyr were again very well utilised in the year under review. In terms of maintenance, the focus was primarily on the renovation of the CPO plant (chemical/physical treatment plant for organic waste) and laboratory optimisation. In addition, a digitalisation project was launched to improve occupational safety.

Compared with the fiscal year 2018/2019, the total volume handled in Austria and South Tyrol fell by approximately 3.1% to 1,691,000 t (previous year: 1,745,000 t). Both Austria and South Tyrol were affected by the decline as a result of the COVID-19 pandemic.

The focus in the Waste Management Segment in the 2019/2020 fiscal year was again on the conclusion of long-term indexed contracts with defined delivery volumes and prices. In addition to industrial and business customers, cooperation with the public sector was further intensified. It is above all the municipalities which continue to represent a material target group for the Waste Management Segment. In addition to the further development of digitalisation projects, activities in the reporting period focused on the conversion of the sorting plant in Linz.

In the year under review, construction work started for the relocation of the Energie AG Oberösterreich Umwelt Service GmbH headquarters from Hörsching to the Wels waste incineration plant. Since the four-track expansion of the western railway line with a connection to the airport affects the Hörsching site, parts of the site will be sold to ÖBB Infrastruktur AG in the course of the project. Completion of the new company headquarters, which is being built as an extension to the existing office premises at the Wels waste incineration plant, is expected for autumn 2021 after a construction period of approximately one year.

Italy was hit particularly hard by the COVID-19 pandemic in the year under review. In addition to the extensive protective measures taken to contain the pandemic and the extensive lockdown measures in Italy, the Neumarkt site in South Tyrol had to contend with declining prices for waste paper as well as declining earnings in glass recycling. In addition, it proved impossible to carry out a planned slag processing campaign for a customer due to delays in issuing the official approval required for this.

Despite COVID-19, WDL-WasserdienstleistungsGmbH enjoyed largely stable conditions in the fiscal year 2019/2020. The main focus was on maintaining security of supply of drinking water and further developing the services offered.