Waste Management Segment

Economic environment for the Waste Management sector

The traditional waste management services were largely provided under favourable general economic conditions during the past six months, thus continuing the positive trend of the previous year. As a result of the continuing high volumes of waste requiring thermal treatment, waste incineration plants throughout Europe continued to operate at high capacity utilisation rates.

In contrast, the negative trend of the previous year continued for the recyclable materials recovered paper/cardboard and metal. With the Wiesbaden recovered paper index already having lost considerable ground towards the end of the 2018/2019 fiscal year, the downward trend, which had been continuing for some time, accelerated rapidly in the first half of 2019/2020. The reason for the new low, which had a negative impact on the entire European recovered paper market due to strong international connections, was oversupply as a result of the continuation of import restrictions in Asia. The development of metals, on the other hand, was not uniform and fluctuated sharply in some cases.

Austrian waste management companies were explicitly exempt from the COVID-19 lockdown from mid-March 2020. From the second half of March onwards, operations were continued under difficult general conditions and in compliance with safety and hygiene regulations as part of extensive measures to maintain waste disposal reliability. In contrast, the Neumarkt site in South Tyrol was severely affected by the health and economic policy restrictions in the region during the period under review.

Business development in the Waste Management Segment

In the first half of the 2019/2020 fiscal year, sales revenues in the Waste Management Segment amounted to EUR 114.2 million, and were thus approximately at the previous year's level of EUR 114.3 million.

EBIT decreased by 11.7% from EUR 7.7 million in the first half of 2018/2019 to EUR 6.8 million in the reporting period. This was due to an impairment of EUR 2.4 million on the plastics sorting plant at the Hörsching site.

The production facility and the equipment at the plastics sorting plant at the Hörsching site were largely destroyed on 10 October 2019 as a result of an explosion and subsequent fire. The insurance company has not yet issued a positive confirmation of cover and the exact amount of the damage, as a function of expert reports, cannot yet be quantified. This means that the impairment in value in the first half of 2019/2020 has not yet been offset by insurance proceeds for rebuilding the facility or for other additional costs. The plant has been out of operation since the fire incident. In order to continue to provide plastic sorting for the customers of Energie AG Oberösterreich Umwelt Service GmbH (Umwelt Service GmbH), substitute sorting of incoming plastic fractions by third parties in Austria and Germany was organised.

In addition, the first half of 2019/2020 was characterised by sharply declining recovered paper and cardboard prices, which led to negative deviations in sales revenues and earnings compared with the previous year. The other waste management services performed better than in the same period of the previous year due to the price increases asserted, especially for commercial waste and hazardous waste, and due to increased throughput volumes at the incineration plants; this partially compensated for the negative effects mentioned above.

Optimal utilisation of incineration plants

The two incineration plants at Wels and Lenzing were again fully utilised in the first six months of 2019/2020, achieving a throughput of 310,658 tonnes (previous year: 303,958 tonnes), which is an increase of about 2.3%. Work on topics such as technological optimisation, material flow management, heating value and impurities was consistently continued.

At Wels, scheduled overhaul work on the turbine of combustion line 1 and the annual overhaul of the thermal system of line 2, with work taking place in two fiscal years, were completed. Apart from this, there were no significant disruptions in the period under review. At the incineration plant at Lenzing, the annual revision was brought forward due to damage to the superheater, which occurred on 14 February 2020, it was successfully concluded under the difficult conditions prevailing due to the COVID-19 protections.

In the reporting period, the waste incineration plant in Wels distributed 143 GWh of heat (previous year: 127 GWh) to the district heating network of the town of Wels and to one other key account customer. Electricity procurement totalled 97 GWh (previous year: 70 GWh).

The treatment plant for hazardous waste in Steyr was very strongly utilised during the reporting period.

Compared with the previous year, the total volume handled in Austria and South Tyrol fell slightly to 847,802 tonnes (previous year: 851,342 tonnes).

Cooperation with the public sector was intensified, and it is above all the municipalities which continue to represent a material target group for Umwelt Service GmbH. Strategically anchored cost management was also consistently pursued in the reporting period, and the ongoing optimisation projects were continued.

More difficult general conditions in South Tyrol

The service portfolio of the Neumarkt location is relatively strongly orientated towards the management of recycling materials. Due to the negative developments in recovered paper/cardboard in the first half of 2019/2020, the Neumarkt location was disproportionately affected by the price declines.

In addition, as a result of the COVID-19 pandemic and the associated closures of recycling centres in South Tyrol, there was a sharp decline in the materials received at the location. Due to the closure of most construction sites, construction waste business also ceased completely from the second half of March onwards. Appropriate countermeasures were initiated.