Derichebourg reports second-highest EBITDA in its history

According to its financial results for the first half of its current fiscal year, which ended March 31, Derichebourg saw the second-highest earnings before interest, taxes, depreciation and amortization (EBITDA) in its history.

During the board of directors meeting to approve the financial statements, Daniel Derichebourg, chairman of the company’s board of directors, highlighted the robustness of the results of the Recycling business, notably through its external growth operations, and the resilience of the results of the Public Sector Services business. He also welcomed the favorable vote by Elior Group shareholders allowing the transfer of the Multiservices division April 18, thereby giving Derichebourg a 48.3 percent stake in the Elior Group. The company says the transaction will generate synergies over the coming years that will also benefit Derichebourg’s shareholders.

Derichebourg notes that the figures reported are in accordance with the International Financial Reporting Standards 5 classification of the Multiservices business as of March 31, 2023 (balance sheet and income statement) and the new division of operating segments into Recycling and Public Sector Services. The company also notes that the Ecore Group, acquired Dec. 17, 2021, was consolidated for six months during the first half of 2022-2023 and for three and a half months during the same period last year.

First-half consolidated revenue was 1.8 billion euros ($1.93 billion), down 12.7 percent year on year, mainly because of the 13.9 percent revenue decline in the Recycling division, which was offset partially by a 16 percent increase in Public Sector Services revenue.

In its Recycling division, ferrous scrap metal volumes decreased 3.7 percent. The decline in the underlying business was 15 percent and 16 percent, in line with the decline in steel production in the major markets served by the company. The price of ferrous scrap metal fell versus the first half of 2021-2022, a period in which it reached record highs, Derichebourg says. The average price of ferrous scrap metal sold was down 50 euros to 60 euros ($54 to $64) per metric ton, or roughly 14 percent, compared with the first half of last year.

The company sold 3.6 percent less nonferrous on a volume basis for the period, which it attributes to the downward trend in the economic environment. After restatement for changes in consolidation scope, the number became 15 percent.

The price of all metals processed by the group fell sharply compared with last year, by around 205 euros ($220) per metric ton, or 9 percent.

Public Sector Services revenue rose 16 percent, driven by the start of several contracts and the full half-year impact of contracts that began last year, including waste collection contracts for Paris districts, renewed under new economic terms in September 2022; the management contract for the recently commissioned sorting center in Angers, France; and various other waste collection contracts.

First-half recurring EBITDA was 179.2 million euros ($192.1 million), down 21.1 percent year on year mainly from falling volumes and unit margins and increasing costs in the Recycling business for energy in particular, Derichebourg reports.

On a rolling 12-month basis excluding Multiservices, Derichebourg Group, recurring EBITDA totaled 412 million euros ($441.6 million).

After 73.2 million euros ($78.5 million) in depreciation over the half year, recurring operating profit totaled 106.1 million euros ($113.7 million, down 35.2 percent year on year.

Derichebourg says nonrecurring items for the period include the net capital gain realized on the sale of eight recycling centers to the Riva Group in fulfillment of the commitments made by Derichebourg Environnement to the European Commission to obtain authorization to acquire the Ecore Group (12.6 million euros, or $13.5 million); the costs of transferring the Multiservices business to Elior Group (2.3 million euros, or $2.47 million); the financial consequences of a ruling by the French Supreme Court against the group in a dispute between Veolia and various subsidiaries of the Public Sector Services business following the takeover of staff assigned to waste collection contracts in 2014 (3.7 million euros, or $3.97 million). Allowing for these items, which had an overall positive net impact of 6.6 million euros, or $70.7 million, operating profit totaled 112.7 million euros ($120.81 million), down 29.8 percent compared with last year.

After 13.4 million euros ($14.4 million) in financial expenses (up 3 million euros, $3.2 million from the increase in interest rates) and other financial income of 1.3 million euros ($1.39 million), group profit before tax was 98 million euros ($105 million), down 35.8 percent year on year.

Income from associates (a loss of 5.2 million euros, or $5.6 million) includes a 5.6 million euros ($6 million) first-half loss by Elior Group. As of March 31, Derichebourg SA held a 24.3 percent stake in Elior Group.

After taking into account a corporate income tax expense of 26.3 million euros ($28.2 million) entailing an effective tax rate of 26.9 percent, and income from associates, net profit from continuing operations totaled 66.4 million euros ($71.2 million), down 40.5 percent year on year.

First-half income net of tax from the Multiservices business was 5.6 million euros, or $6 million.

Consolidated net profit for the first half of 2022-2023 totaled 72 million euros ($77.2 million), down 39.1 percent year on year. The portion attributable to Derichebourg shareholders was 71.5 million euros, or $76.6 million.

In the medium term, Derichebourg says it is convinced of the role and future of recycled raw materials given the benefits they provide in terms of greenhouse gas emissions and energy consumption compared with primary metal production. The multiple projects expected to materialize in Europe over the coming years for transforming blast furnaces into electric steel mills that can consume ferrous scrap metal provides corroborating evidence of this, the company adds. To be commissioned between 2027 and 2030, these projects will generate additional demand for several million metric tons. The company says it also is investing in cutting-edge technologies to meet the future expectations of customers seeking to obtain raw materials derived from high-quality recycling.

In the nearer future, against a backdrop of war between Russia and Ukraine, inflation, rising interest rates and questions about the economic situation in Europe and the United States, Derichebourg says it remains confident in the future of its activity and business model, which has always allowed it to increase market share and profitability. It will continue to implement its development capex plan to continue to create more value while exploring opportunities for acquisitions that make industrial and economic sense.

In the Public Sector Services business, which is based on contracts allowing a certain predictability of earnings, revenue is expected to continue to grow, albeit more slowly. Profit margins are expected to remain stable, the company says.