Waste Management Competitor Analysis in UK Market
THE MARKETPLACE
The UK waste-management industry involves the activities of
private contractors and local authorities. In the past, waste management was
mainly undertaken by local authorities, but much of their work is now carried
out by commercial companies.
Consolidation has taken place to the extent that the UK private
sector is dominated by a small number of companies. The market can be divided
into three broad types of waste-management company:
• companies that are subsidiaries of larger groups (e.g. SITA,
part of Suez Environnement; Veolia Environmental Services, owned by Veolia;
Viridor, owned by Pennon Group PLC; and Waste Recycling Group (WRG) Ltd, owned
by Fomento de Construcciones y Contratas [FCC])
• specialist waste-management companies (e.g. Biffa Ltd, Cory
Environmental Ltd, Shanks Group PLC)
• small contractors operating at a local level.
Some of these companies have extensive recycling facilities, and
the financial results in the following profiles include all aspects of waste
management and recycling. Private companies undertake work directly for
clients, e.g. industrial sectors, and also municipal waste management on behalf of local authorities.
Recent consolidation in the private sector has seen the
acquisition of Cleanaway’s UK activities by Veolia Environmental Services of
France. Regarding ownership, the UK waste-management market is dominated by overseas
companies, SITA for example. For UK-owned companies, there is a strong ownership
stake by private-equity companies.
Trends in waste management are taking place to implement the
waste hierarchy, a strategy that prioritises waste-management options, ranging from
the most permanent and effective solutions (waste prevention at source) to the
least desirable option (landfill). There is now an increasing emphasis on
recycling to achieve the targets of the Landfill Directive, which require a
staged reduction in the amount of waste that is landfilled. The statistics in
the report give details of the amount and type of waste generated, with an
emphasis being placed on municipal waste. These show a decline in landfill and
a rise in incineration with energy recovery, recycling and composting.
Important issues face the waste-management sector. Increasing
regulation of the amount and type of waste accepted at landfill is stimulating
illegal waste dumping and fly tipping, with a consequent cost in cleaning up
areas where this has taken place. The number of licensed landfill sites is
decreasing, another pressure on the UK to reduce landfilled waste. To increase
recycling for a growing range of products, it is important that a competent and
widespread infrastructure is built up and that planning permission for this can
be obtained. The waste-management industry is increasing in complexity and
there could be future challenges in recruiting and retaining suitably qualified
employees in waste management. Global warming is also at the centre of the
waste management industry and associated efforts are being made to reduce
carbon emissions. Legislation is currently being developed to cover climate
change, with targets being set for each sector.
Recycling is forecast to increase, a result of tighter
legislation and a rise in the costs associated with landfill. At a municipal
level, householders will be expected to take greater responsibility for
separating waste and restricting the amount of waste they generate. An increase
in energy-from-waste plants, including incinerators, can be expected as another
way of reducing landfilled waste. This will benefit the contribution made to
electricity (and, in
some cases, heat) production. Future projects such as large
housing schemes and the London 2012 Olympics will provide a demand for more waste-management
activity.
MARKET LEADERS
Biffa Ltd
Company Structure
Biffa Ltd (Biffa PLC until 24th May 2008) is a leading
waste-management company in the UK. The company is structured around:
• Collection — providing waste collection and recycling services
to the industrial, commercial and public sectors. This involves collecting over
3.3 million tonnes of waste from around 75,000 customers.
• Special Waste — providing a range of specialised services for
the collection, treatment/recycling and disposal of solid and liquid hazardous
waste for industrial and commercial customers. Part of Biffa’s service here
includes the use of company containers in a range of sizes for the storage of
hazardous materials ready for collection.
• Resource Recovery and Landfill — providing landfill, dry waste
treatment and recycling. This division includes 32 landfill sites, recycling
facilities, transfer stations and a pilot soil remediation plant at Risley,
Warrington.
• Power Generation — generation of electricity from landfill gas
to give 109 megawatts (MW) of installed electrical power capacity.
Biffa has over 1,500 collection vehicles, 64
industrial/commercial depots, 23 municipal collection depots and 42
treatment/recycling plants. Until 9th October 2006, Biffa was part of Severn
Trent PLC.
Current and Recent Developments
In July 2007, Biffa opened a £3m composting facility near Derby
to treat waste from 24,000 households. Also in 2007, Biffa opened a new
landfill site at Cottonmount in Northern Ireland. This new landfill site, plus
a reopening of the Isle of Grain landfill site led to an increase in Biffa’s
landfill activity against a national decline in landfill volumes. October 2007
saw the opening of a soil remediation facility at Colnbrook near Heathrow.
Biffa was awarded a 15-year contract with Warwickshire County Council in
December 2007, to build a facility for the composting of food and garden waste
collected from homes. This project is subject to planning permission. A £1.2m
recycling facility was opened by Biffa in Barking in April 2008. In April 2008,
Biffa Ltd agreed a £1.26bn takeover by Waste Acquisitions Ltd,
a newly incorporated company formed for the purpose of making
this acquisition, owned indirectly by various entities within Montagu Funds,
GIP Funds and UCIL.
Financial Results
In the year ending 30th March 2007, Biffa Ltd (then Biffa PLC)
made a pre-tax profit of £72.8m on a turnover of £742.7m. The previous year’s
pre-tax profit was £65.5m, on a turnover of £712.3m.
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