Biffa shares binned over lack of drivers
Biffa saw its shares binned by investors as the rubbish collection group continued to grapple with shortages of lorry drivers.
The company said it has been hit by a lack of vehicles, fuel and waste containers.
It has also been forced to temporarily suspend some of its bin collection services for local UK councils as a result of the shortages. The company collects rubbish for more than 30 local authorities.
While Biffa noted ‘signs of stabilisation’ in recent weeks, it was continuing to monitor the situation and has raised pay to attract new drivers. The group also planned to increase its prices to offset the effects of rising inflation. Despite this, the shares tumbled 9.2pc, or 36.5p, to 358.5p.
The assessment came as Biffa’s profits bounced back close to prepandemic levels following a sharp drop in 2020. Profits for the six months to September 24 came in at £45.4m, up from £9.7m in the same period a year ago, while revenues jumped 39pc to £671m.
‘The rebound in business performance is testament to the resilient characteristics of our business model,’ said boss Michael Topham.
As a result of the rebound, the company reinstated its interim dividend at 2.2p per share and reaffirmed its full-year expectations. One black mark, however, was the firm’s recently acquired surplus food redistributor Company Shop, which it bought earlier this year for £88m. The division caused a £25m write-off due to ‘short term underperformance’ and lower footfall.
Analysts at Peel Hunt said the Company Shop business was ‘the big disappointment’ in Biffa’s results and downgraded their rating on the firm to ‘hold’ from ‘add’ while cutting their target price for the stock to 395p from 430p. The FTSE 100 shed 0.5pc, or 35.24 points, to 7255.96 while the FTSE 250 added 0.6pc, or 140.55 points, to 23574.62.
The blue-chip index remains subdued due to high inflation and predictions of an imminent rise in interest rates, which is boosting the pound and suppressing equities. Oil firms also weighed on the index as crude prices headed down towards $80 a barrel. Shell lost 1.7pc, or 28p, to 1663.8p while BP fell 1.6pc, or 5.55p, to 336.45p.
Meanwhile, housing firms got a boost as excitement continued around the UK’s hot property market. Persimmon rose 4.8pc, or 129p, to 2819p while Berkeley Group jumped 3.9pc, or 166p, to 4462p, Barratt added 3.6pc, or 24.2p, to 693.6p and Taylor Wimpey was up 3.8pc, or 5.75p, at 158.65p. Mid-cap housebuilder Crest Nicholson bounced 5.2pc, or 17.2p, to 351.2p as it upgraded its profit forecasts following strong sales in its second half.
The firm expects profits for the year to the end of October to be ‘marginally ahead’ of previous predictions of £101.2m, as it benefited from the boom in housing demand during the pandemic.
Rotork, the FTSE250 pipeline engineer, dropped 7.2pc, or 26.2p, to 345.2p after warning that a global shortage of computer chips was hitting its business.
The group flagged that sourcing components had become ‘even more challenging’ in the last few months, causing it to shut down some of its production lines for several weeks. As a result, revenues in the four months to the end of October were down year-on-year.
Budget airline and package holiday firm Jet 2 descended 9.7pc, or 116p, to 1079p as its losses more than doubled. For the six months to the end of September, the firm’s pre-tax losses widened to £205.8m from £119.3m a year ago as uncertainty about international travel and constantly changing UK restrictions put many off taking a summer holiday abroad.
Despite this, Jet2 flagged that following the end of the Government’s ‘traffic light’ restrictions in early October, bookings for the winter season had been ‘markedly stronger’.