UK Waste Management: Market insight report
Apex Insight, February 2013, Pages: 31
What does this report contain?
This report reviews the UK waste management market, covering the collection, treatment and disposal of municipal, commercial and industrial waste. It looks at the market size and growth, macro-economic, regulatory and commercial drivers.
It reviews the competitive landscape, and analyse competitive differentiation of the main operators in the sector.
Based on analysis of historical drivers, macro economic and other forecasts, and the analysts' experience of having worked in the sector, this report provides a sector forecast. While many reports on the industry contain data and description, a critical objective for us in writing this report has been to share insights and conclusions.
Why is it useful?
While the economic downturn has affected many industry sectors adversely and severely, the UK waste management market has fared relatively well. Though the operators have been forced to de-leverage, and adapt their business models to changing demand for their services, the market has resilient underlying drivers. In order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information in a concise manner. The aim of this report is to provide this.
This report is based on publicly available data including company annual reports, websites, press releases and government information and statistics; interviews with senior decision makers in the industry; in-depth analysis of macro-economic environment and relevant market drivers and our own experience of advising both companies and investors in the waste management and adjacent sectors. Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate and support conclusions.
Contents
The UK Waste Management market
- Market definition
- History and regulation
- Segmentation
- Customer industries
Market size & growth
- Waste Management market size & growth
- International comparisons
Market drivers
- Explanation of market drivers
- Drivers and their impact
Market characteristics
- Entry barriers
- Value drivers
- Cost structure
- Comparison to other sectors
Competitive landscape
- Market structure
- European waste groups
- Main UK operators
- Profitability
- Productivity
Forecasts
- Macro economic forecasts
- Key drivers forecast
- Market forecast
About Apex Insight
List of Charts and Tables
Components of the DEFRA waste hierarchy
Waste generation by type / million tonnes
Waste generation by source / million tonnes
Waste management by function or market / £m
Commercial & industrial (C&I) waste by client sector / million tonnes
UK waste management revenue / £m
UK waste management revenue by segment / £m
Non-hazardous waste sent to recycling / million tonnes
Incineration of non-hazardous waste / million tonnes
Non-hazardous waste disposal, by destination / million tonnes
Waste management sector turnover share of GDP, international benchmark / %
Waste management sector turnover per person employed, international benchmark / €000
UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
UK Inflation: Consumer price index and GDP deflator / % annual change
UK population and household growth: historical and forecast / millions
UK GDP in current prices (money GDP), inflation (GDP deflator), households and real GDP per head / % annual changes
Index of UK manufacturing output and number of enterprises
Waste generation, by source, million tonnes
Waste industry cost structure / share of 2011 turnover
Waste industry gross margin and turnover growth relative to other industries
Waste Industry concentration / % of enterprises with revenue > £5m
Main UK waste groups by group (global) turnover and geographical focus / £bn
Waste management industry estimated market revenue shares / £m
Waste management industry gross margin trend, by segment
Trends in profitability of leading UK waste operators / £m pre-tax profit, margin %
Profitability of UK operators / Pre-tax profit margin %, 2011
Revenue per employee for main UK waste operators / £'000
Trend in revenue per employee, main UK operators / £'000
UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes. Historical and OBR Dec 2012 forecast
UK Consumer Price Index and GDP deflator / % annual change. Historical and OBR Dec 2012 forecast
Forecast UK waste management turnover / £m
Market growth and drivers
- The UK waste management market is currently worth £9.1bn. While the prolonged economic downturn has affected some of the operators, the overall market has been resilient. The market has experienced 6.6% growth since 2006 driven by regulation like landfill diversion which in turn has stimulated the emergence and growth of waste treatment markets
- The waste management market described in this report includes several segments; collection of municipal and commercial waste; different forms of treatment types of those waste streams, recycling, generation of energy from waste and disposal
Key industry issues
- Waste volumes are the core of what has determined growth of the waste management market historically. More recent growth however is driven by the regulation that determines how much waste is allowed to be sent to landfill. EU framework directives and UK interpretations specify regulation and incentives around waste prevention, recycling, optimal use of resources, reclamation of energy from waste and aim to limit the last resort of waste disposal: landfill
- The next landfill diversion targets are for 2020, and the reduction of biodegradable municipal waste is significant (10.2 million tonne from the current 23.3). The investment in sorting and treatment infrastructure required to meet these targets drives treatment markets over the coming years. Alongside, they have caused enthusiasm for the recovery of energy from waste
This report provides detail on three key market segments: collection of household waste, collection of commercial & industrial waste, and treatment and disposal. The report covers different customer requirements, business models and service offerings
- The collection segment is highly fragmented, especially in commercial & industrial waste given the nature of the client base. In contrast, the treatment and energy recovery segments are capital intensive and contracts require significant finance and dedicated bid teams. As a result, these segments are more concentrated
- Barriers to entry in treatment markets are often high and important factors for the operators are scale, scope of services, and contract retention
Competitive landscape
- Most of the main waste management operators are former utilities, and the scale and financial resources of these businesses offer them significant competitive advantage. While some of these have been marred by debt related problems, they still have the scale and scope to secure large contracts, finance infrastructure and offer a broad set of services. The competitive landscape is relatively consolidated at the top tier with the top five operators accounting for 45% of the market
- Most of the larger operators have an international footprint, and offer services across waste management segments. Out of the top five operators in the UK, three are overseas groups: Veolia leads in terms of market share, Suez and FCC are the next players, both multi-national groups. Biffa and Pennon Group are home-grown
Outlook
- Regulation and the need to install the infrastructure required to meet waste reduction and landfill diversion targets targets will continue to drive the waste management market, especially the treatment segment. Different methods to recover energy from waste are coming into their own and offer operators attractive revenue streams
- Recent regulation has reinforced the underlying drivers supporting longer term market growth. The amount of waste allowed to be sent to landfill is increasingly limited, as is landfill void. Prevention, recycling and recovery markets will have to make up the difference, while landfill tax (an annually increasing levy on tonnes of waste sent to landfill) will provide further stimulus
- As the UK economy recovers from the economic downturn, business activity will pick up, and create further opportunities for the operators
- Biffa
- Cory Environmental
- FCC Environment
- Grundon Waste Management
- Hills Waste
- London Waste
- Pennon Group
- Shanks
- Sita
- Suez Environmental
- Veolia Environmental
- Viridor
- Waste Recycling Group
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