A ban on plastic recycling being shipped to South East Asian countries has hit waste management firm Biffa, the company has revealed.
However, bosses at the company, which is the biggest collector of commercial waste in the UK, said it has weathered the storm and will spend £27.5 million to allow more plastic recycling to take place closer to home, at its Seaham, County Durham, recycling plant.
The announcement came as Biffa said pre-tax profits for the year to March 29 fell 44% to £21.5 million, with revenues up 3.3% to £1.1 billion.
Chief executive Michael Topham said the company “successfully weathered the headwinds associated with the Chinese import restrictions on commodities”.
He added that household bin collections in its municipal division also dragged down overall profits, due to old loss-making contracts with some of the 31 local authorities it works with.
“Both of these areas, which have put downward pressure on our financial performance, have now stabilised.”
The municipal division performed particularly badly, with revenues down 4% to £164.6 million and underlying pre-tax profits down 32.2% to £16.6 million.
By comparison, the industrial and commercial division saw revenues jump 8% to £608.3 million, with underlying pre-tax profits up 13.2% to £87.4 million.
As a result, the company will be split into two divisions – collections in one and resources and energy in another.
Mr Topham said the split “will provide a more efficient, focused structure and position us for growth in the areas where we have advantaged positions”.
Despite the fall in profits, the boss added that Biffa plans to continue buying up smaller rivals, having snapped up seven businesses in the last year alone. It has bought 17 rivals since listing on the stock market in October 2016.
The extra investment into the Seaham recycling plant will allow Biffa to recycle 120,000 tonnes of plastic a year, the company said, adding that 85% of all milk bottles in the UK now contain Biffa recycled material.
Last week, rival waste firm Pennon, which owns Viridor, announced that it would be opening its own £65 million plastic recycling plant, as companies can no longer rely on shipping plastics to countries including China and Malaysia – where bans on plastic waste are now in force.
Biffa also said it would be looking at future investments in “energy from waste” power plants.
The company’s preferred measure of profits – underlying pre-tax profits – was up 7.4% to £64 million.