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Analysis of the Waste Management Area

The Waste Management Area is the one that is mostly affected by the overall economic crisis and shows a margin that fell compared to the first six months of 2008, as seen in the following table:

(Euro millions)30-jun-0830-jun-09Abs. ChangeChange %
Area EBITDA 85.4 84.3 -1.1 -1.3%
Group EBITDA 257.6 271.3 +13.7 +5.3%
Percentage 33.1% 31.1%-2.0 p.p.  

For some time now, the Hera Group has been the most important integrated operator in the sector at European level, due to the fact that it has over 70 treatment and disposal plants for municipal and special waste.

The Group operates through 7 Ato's in the Provinces of Ravenna, Forlė-Cesena, Rimini, Bologna, Ferrara Modena and Pesaro-Urbino in the area of Urban Hygiene Services including, sweeping, collection, and disposal of municipal waste, just as for the Water Cycle services.

An analysis of the operating results achieved in the Waste Management segment is shown below:

Income Statement                           (Euro millions)30-jun-08Inc.%30-jun-09Inc%Abs. ChangeChange %
Revenues309.9 313.3 +3.4+1.1%
Operating costs (159.1) -51.3% (163.5) -52.2% +4.4 +2.8%
Personnel costs (73.6) -23.8% (74.6) -23.8% +1.0 +1.3%
Capitalised costs8.2 2.6%9.2 2.9% +1.0 +11.8%
EBITDA85.427.5%84.326.9%-1.1-1.3%

Revenues at the end of the first half of 2009 show a 1.1% increase, up from Euro 309.9 million of 2008 to Euro 313.3 million of the same period of this year. This increase is linked to the higher urban hygiene revenues due to tariff adjustments obtained to cover the further services requested, partially reduced by the decreased volumes of treated special waste.

In terms of percentage impact on total volumes collected, separate collection reached 44.8% at the end of the first half of 2009.

The table below demonstrates the decreased amount of waste disposed of, 6.2% less than the first six months of 2008:

Quantitative Data
(thousands of tonnes)
30-jun-08Inc%30-jun-09Inc%Abs. ChangeChange %
Municipal waste859.435.6%877.436.3%+18.0+2.1%
Waste from the market 957.6 39.6% 826.7 34.2% -130.9 -13.7%
Sold waste1,816.975.2%1,704.170.5%-112.8-6.2%
By-products of plants600.124.8%712.129.5%+112.0+18.7%
Waste treated by type2,417.0100.0%2,416.3100.0%-0.7-0.0%
Landfills772.131.9%647.526.8%-124.6-16.1%
Waste-to-Energy plants 282.9 11.7% 368.1 15.2% +85.2 +30.1%
Selection plants 173.1 7.2% 141.5 5.9% -31.6 -18.3%
Composting plants 159.5 6.6% 174.0 7.2% +14.5 +9.1%
Inert. and chemical plants 525.3 21.7% 561.1 23.2% +35.8 +6.8%
Other 504.1 20.9% 524.1 21.7% +20.0 +4.0%
Waste treated by plant2,417.0100.0%2,416.3100.0%-0.7-0.0%

From the analysis of the quantitative data shown above, we see an increase in municipal waste and also a strong decrease of waste from the market. On the other hand, on the plant level we note a heavy drop in the use of landfills while the use of waste-to-energy, composting and stabilization plants has gone up, also thanks to the start-up of the new plants.

In short, the economic results of the Waste Management area are positively affected by the start-up of the new plants and, to a limited extent, by the increase in urban hygiene services supplied. To the contrary, the effects of the economic crisis that bring about a decrease in treated special waste volumes and prices of materials earmarked for disposal through separate collection have made a negative impact.

The EBITDA of the Waste Management Area fell from Euro 85.4 million in the first half 2008 to Euro 84.3 million in the corresponding period of 2009, with an decrease of 1.3%.

 
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