Australia’s biggest rubbish collector Cleanaway Waste Management has two options: shape up or risk being shipped out to a new owner.
Fund managers say they want to see another clean result or two. They like the story, but are not jumping in just yet. Cleanaway is prone to below-the-line mishaps; earnings per share were only 1¢ in FY23, down from 3.8¢ in FY22 and 7¢ in FY21. And to prove he is serious, and to get wider company buy-in, he has set up Cleanaway’s biggest ever long-term incentive plan, capturing 547 leaders from head office all the way down to branch managers.
Those branch level P&Ls are Cleanaway’s beating heart. However, shareholders invest at the group level. If it is simply making a delivery, for example, it might make more sense to contract a third-party logistics group. Or, if it signs a new 10-year council contract, which requires a Cleanaway driver in a new Cleanaway truck, leasing the vehicle may make more sense, given the truck will be gone when the contract expires.Schubert has taken fund managers and analysts through these sorts of examples in meetings over the past couple of weeks.