Cleanaway Waste Management shares jumped 8.3% after the waste services company delivered a modest first-half earnings beat and lifted its full-year outlook, with underlying strength across its core divisions offsetting a cluttered statutory result.
Underlying EBIT rose 16.9% to $228.2 million, nudging ahead of both RBC Capital Markets and consensus forecasts, driven by solid growth in the Solid Waste Services segment and a better-than-expected contribution from the recently acquired Contract Resources business. Net revenue climbed 13% to $1.875 billion, while underlying EBIT margin edged 40 basis points higher to 12.2%, reflecting price increases, labour efficiency gains, and the ongoing fleet transformation programme.
“We are pleased to upgrade our FY26 underlying EBIT guidance to between $480 million and $500 million following a robust first-half and outlook," Cleanaway CEO & managing director, Mark Schubert, said:
“This upgrade to guidance demonstrates both the underlying strength of our business and the delivery on commitments we have made to shareholders to build a stronger, more profitable business.
Statutory EBIT told a different story, falling 21.2% to $137.2 million after $91 million in significant and non-recurring items. The headline figure, however, did little to dampen investor enthusiasm given the strength of the underlying performance.
FY26 guidance was upgraded at the midpoint, with underlying EBIT now expected to land between $480 million and $500 million, up from a prior floor of $470 million. RBC analyst Owen Birrell attributed the lift to positive momentum across Solids, an ETS recovery, and anticipated cost synergies from Contract Resources.
Birrell described the result as "positive", noting that underlying operational strength more than offset headline noise. He maintained an outperform rating and $3.40 price target on the stock.
Cleanaway also declared a fully franked interim dividend of 3.35 cents per share, up 19.6% on the prior period, representing a payout ratio of 68.4 per cent of underlying net profit after tax.
“We have a track record of growing revenue, expanding margins, improving capital efficiency, and returning value to shareholders, and we have a strategy and plan to continue this performance in the years ahead.
“Our refreshed strategy is designed to deliver strong and growing free cash flow.
“The strategy drives top-line growth through an improved customer value proposition, leverages our scale and network and improves asset utilisation and operational efficiency.
“It will also enable us to deliver at least $35 million of annualised indirect costs savings from FY27, with initial benefits of $15 million to be realised in the second half of FY26.
“Our core solid waste business delivered earnings growth and margin expansion. Price increases, strong contract management, improved labour productivity and lower fleet costs drove the result.
“The period included a five-month contribution from Contract Resources that exceeded our expectations. This performance reflects the quality of the business and early integration benefits.
“Having built positive momentum in the first half, we are confident that earnings and free cash flow will accelerate in the second half.”
Shares were 8.33% higher to $2.60 just after midday.