Renewi shares drop as firm warns on full-year outlook

Shares in Renewi (LSE: RWI) fell 4.3% in morning trading after the recycling company warned its full-year earnings would likely miss market forecasts due to the “challenging” economic environment across several key markets.

In a third quarter update, Renewi said volumes at its Commercial Waste Netherlands division continued to be subdued, especially in construction, reflecting wider weakness. Its Coolrec business also delivered lower performance on decreased plastic prices. However, the company’s UK Municipal division put in a more solid and stable performance.

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While positive momentum continued for its Mineralz & Water and Maltha units, Renewi said the margin impact of lower volumes has been partially offset by cost savings. Strategic initiatives have helped improve trading and reduce costs, which Renewi expects to continue.

Despite being confident in meeting its medium-term organic revenue growth target of over 5% annually, as well as goals for margins, cash flow and return on capital employed, Renewi warned its full-year results would likely fall short of expectations.

Shares have dropped 6.1% over the last 12 months. The update comes after Renewi outlined ambitious medium-term financial targets in early October.