Biffa reinstates dividend, though shares slide following broker downgrade
Biffa has reinstated a dividend today, after its revenue has climbed nearly 40 per cent in the past six months.
However, the results were met with shares diving more than 10 per cent throughout the day, which steadied to a fall of 9.62 per cent to 357p per share by market close.
The waste management company posted a dividend on 2.20p, after securing a revenue of £671.2m in the six months to September 24.
The London-listed firm swung from an operating profit loss of £45m a year prior, which has recovered 14 per cent in the period to a loss of £16.7m.
Chief executive Michael Topham said that Biffa has “managed the impact of the supply chain challenges that are affecting the entire economy, and continued to make good progress in delivering our strategic priorities.”
The UK’s HGV driver shortage reportedly left around 18 councils facing delays to their rubbish collections earlier in the autumn.
The company has invested £340.8m across circular economy infrastructure projects since September 2019 – which focuses on reducing materials as much as possible, as well as reusing and recycling.
Biffa also said that its cash management had been “better than expected in the period”, it said in a statement today.
A broker downgrade
On what may have sparked investors to ditch the stock, senior investment analyst at Hargreaves Lansdown Susannah Streeter said: “Although Biffa appears to be making up good progress on its recovery with adjusted operating profit returning to pre-pandemic levels, bumps are looming on the road ahead.”
Streeter explained that the waste management company is “not immune” to the supply chain problems that have rippled across British industry, alongside the shortage of drivers.
“Biffa’s move to embrace the circular economy has backfired in the short term as the acquisition of the Company Shop group, a redistributor of surplus food and household products which saw disappointing footfall. This contributed to the shares slip and a broker downgrade intensified the downward slide.”