By NEIL HARTNELL
Tribune Business Editor
Bahamas Waste yesterday expressed confidence it would generate a 100 per cent net income increase for the 2012 full year, despite experiencing a margin increase caused by key equipment costs more than doubling.
Noting that the BISX-listed company’s $782,734 net income for the first nine months was up “about $400,000” over 2011 comparatives, Disa Campbell, its chief financial officer, told Tribune Business this had been driven by 16 per cent year-over-year revenue growth.
While conceding that the 2012 third quarter was up against “probably one of our worst” comparative periods, hence a 500 per cent year-over-year bottom line increase, Ms Campbell said the three months to end-September 2012 saw growth in construction-related revenues.
She added that Bahamas Waste was looking to expand its recycling operations beyond the “underperforming” cardboard business into areas such as plastics and paper, in a bid to revive this sector.
And the BISX-listed company is also looking at an increase in biodiesel volumes in 2013, given that it is now producing 2,000 blended gallons per week for 70 per cent of its vehicle fleet.
“This year is shaping up to be pretty good,” Ms Campbell told Tribune Business. “We should probably double net profit from 2011 year-over-year, increasing it by 100 per cent.
“It’s a good performance, it’s a strong performance, but operating costs are the usual story - fuel, tyres, repairs and maintenance are big ticket items for us.”
Focusing on one key piece of equipment, large container skips used for construction-site waste, Ms Campbell explained: “When I first came in, we were bringing in open-top containers, large construction skips, at $3,700 - landing them at under $4,000 a piece.
“Now, we’re bringing them in at $8,000 each. We try really hard to keep our equipment at top standard. The depreciation has also doubled over the last few years.
“There’s really not any room for revenue increases because of the economy. Our margins are getting squeezed a little bit.”
Explaining that Bahamas Waste was especially focusing on discretionary spending to keep total expenses, which hit $6.724 million for the first nine months, under control, Ms Campbell said that while the company’s performance was “good, it’s not where we would have wanted it to be”.
She told Tribune Business that Bahamas Waste was expecting “more of the same”, in terms of its financial performance, for 2013 “unless we can get our recycling numbers up”.
“We’re hoping for a comparable year , at a minimum, in 2013,” Ms Campbell said. “We haven’t heard of any new major projects coming on. The roadworks will be winding down then, so we’ll have to strive really hard to meet the same marks we did in 2012.”
She acknowledged that maintaining the contracts it had from the Government for residential garbage collection in inner-city New Providence would be key to Bahamas Waste’s 2013 performance, and matching this year’s.
But considerable uncertainty remains over whether those will be extended, and for what duration and price, with Bahamas Waste treating revenues derived from these contracts as “extraordinary income”.
“We’ll just have to wait and see what happens,” Ms Campbell said of the Government business. “When you look at our industry, that’s [residential collections] the only real growth area.
“Without new private enterprise, there’s really not a lot of growth in the commercial sector at all.”
Noting that Bahamas Waste’s total revenues for the nine months to end-September 2012 were up $489,000 over 2011 at $7.507 million, Ms Campbell said the third quarter performance was “pretty much on target” with expectations.
Bahamas Waste, she added, had “anticipated an increase in construction revenues” due to the ongoing Baha Mar building and decision to “accelerate” the New Providence Road Improvement Project towards a completion.
Fuel costs had come down slightly, due to a combination of lower prices and reduced ‘open market’ purchases due to Bahamas Waste’s increased production of its own biodiesel.
“We are up to 1,000 gallons a week in raw biodiesel,” Ms Campbell told Tribune Business, “and blend that with 50 per cent premium diesel to make B50. So the in-house production for the vehicle fleet is about 2,000 gallons a week.
“It’s coming along slowly but surely, and we expect that in the next year our volumes may increase a little more. We have 70 per cent of our fleet now on blended fuel.”
Elsewhere, the Bahamas Waste chief financial officer said the company was having difficulty in obtaining the necessary cardboard volumes from the business community.
Noting that it may be more cost effective for Bahamian companies to dispose of waste cardboard in the landfill, rather than store it for Bahamas Waste, Ms Campbell disclosed: “The cardboard recycling is still underperforming.
“We are currently looking at other commodities we may be able to get in to make that venture a little more profitable.
“The biggest problem with that is getting clean cardboard, and the cost to the customer and the landfill price doesn’t make it attractive,” she added.
“They may have a container for cardboard at $175 a month, and when doing two loads a week and sending it to the landfill for $80, it’s not attractive apart from large wholesalers.”
Bahamas Waste was assessing plastics, “in particular”, and paper as alternative recycling materials.
Ms Campbell said Bahamas Waste did not expect much activity with its share repurchase programme to happen before year-end, adding that the bulk of activity would occur in 2013.