Van Gansewinkel Groep was not left untouched by the after-effects of the recession in 2010. Every division of  the company had to deal with pressure on rates. However, effective quality programmes and a recovery in the prices of raw materials limited the decline in operating results. CEO Ruud Sondag explains, ‘We emerged from the crisis with a better cost structure and a more focused vision of the future. We know where we want to be and how we want to get there.’

Van Gansewinkel Groep reconsidered its strategy thoroughly during 2010. ‘It was important to look carefully once more at all the factors surrounding us and to determine whether we are still on the right track. The reassessment confirmed that we have chosen the right course. We have identified potential for growth in Europe, where the market is in different phases of development. Some countries use landfills to dispose of their waste, others use landfills and, on a limited scale, incineration or recycling, while still other countries focus largely on recycling, with little incineration and barely any landfilling. The countries in which Van Gansewinkel Groep operates are divided across these three phases (see the article opportunities for growth). This presents opportunities.’

Opportunities for growth in Europe

Van Gansewinkel Groep is one of the few waste service providers in Europe that possess knowledge and expertise about the entire waste chain. ‘We should use that to our advantage,’ Sondag emphasises. ‘The scarcity of raw materials and the increasing awareness of sustainability mean that increasingly smaller volumes of waste will be put in landfills or incinerated. Recycling materials on a sustainable basis is the future, and that is the path that we have taken. The market is evolving, and it is our intention to make an active contribution. Our strategy offers exceptional possibilities. Europe is a growth market for our company, not a displacement market.’

In 2011, Van Gansewinkel Groep will define concrete targets for the medium term. ‘That will force us to make choices that contribute directly to EBITDAE. Everything starts with our customers. It is our intention to find innovative, profitable solutions for our customers and together with them. That is our highest priority, that is our raison d’être and our commercial proposition.

Besides organic growth, the company also seeks to grow through acquisitions. ‘We have a solid track record in terms of acquisitions. In 2010, our acquisitions included Flemish waste service provider Leysen, giving us a 10% increase in turnover in Belgium. We will keep looking around for opportunities to reinforce our activities in Collection & Services and Recycling. Most of our acquisitions in recent years have been small firms, though we are also looking at major prospects. We have cash resources that we can use to finance acquisitions. And if those resources are not enough, we can call on our shareholders.’

Stronger starting position

Van Gansewinkel Groep has renewed several important long-term processing contracts in 2010 and 2011, although at significantly reduced rates. To compensate for the resulting loss of margin, totalling approximately €80 million, cost-cutting and efficiency programmes were initiated across the whole group. ‘The purpose was to achieve structural improvements and to reinforce our starting position for further growth. We succeeded in those goals,’ says the CEO.

For example, the company invested in onboard computers, in planning systems and in innovative recycling technology. ‘We also put a great deal of effort into improving the yields at our energy-from-waste plants. At the same time, we invested in the company’s image and in realising our vision of Waste no more. Despite the difficult market conditions, the company has become intrinsically stronger. By the end of 2011, our annual costs should be reduced by more than €100 million on a structural basis.’

The closure of the energy-from-waste plant in Rotterdam on 1 January 2010 and the increased efficiency of the operation served to partially compensate for the concessions in the rates for the Energy from Waste activities in 2010. In addition, the energy-from-waste plant in Rozenburg was awarded R1 status, meaning that Van Gansewinkel Groep can now also convert waste from other countries into energy. ‘In this way, we have transformed our Energy from Waste activities from a problem environment into a stable environment for the future. During the coming years, the focus within Energy from Waste will be on generating heat and steam for surrounding enterprises and conglomerates.’

Despite, and thanks to all the measures, changes and efforts, customer and employee satisfaction improved and the safety figures displayed an upward trend. ‘To me, that is truly an impressive achievement,’ Sondag says. ‘It demonstrates our company’s tremendous resilience. Putting our back into it in difficult times, that is truly part of this company’s genetic make-up. These are scores that allow us to go forward, we do not have to first set matters to rights internally.’

Raw materials scarcity as a business case

Despite the difficult market conditions, Van Gansewinkel Groep again succeeded in putting across its message in 2010. ‘As a waste service provider and supplier of raw materials and energy, we can help solve issues concerning scarcity of raw materials and climate change. Our understanding of logistics systems, materials and recycling allows us to balance chains of materials, making it possible for natural raw materials to remain in the environment. As recycling almost always helps reduce CO₂, we are also helping in the fight against climate change. The worldwide focus on raw materials, scarcity and sustainability ties in perfectly with our vision and presents opportunities for our company.’

‘Waste no more’ is not simply a slogan. We truly make something beautiful out of waste: not only raw materials and energy but also manufactured products. Take Van Gansewinkel Office Paper for example: 100% recycled Cradle to Cradle Office Paper, without a single tree needing to be chopped down. Together with our partners Océ and Steinbeis, we bring matters full circle. And this is but the first of many products and partnerships. It is our goal to link more of our flows of materials to relevant and leading manufacturers and market operators.’

Van Gansewinkel Groep has definitely gone beyond the pioneering phase in its role as a knowledge partner, Sondag believes. ‘We are structurally investing in knowledge, by organising training programmes and by hiring new trainees with science profiles. But we have also set up a new department to focus on flows of materials, collection systems and innovative concepts.’

Improved financial position

In April 2011, Van Gansewinkel Groep reached an arrangement with its financiers to expand the covenants within the scope of the existing agreement. The horizon for the repayment obligations was also extended.

‘The modified conditions will offer us more financial security during the coming years, and further possibilities for implementing its strategy,’ the CEO explains. ‘We have also created more time to select for ourselves -- together with our shareholders -- the timing of a next phase. Although going public is still the solution preferred by the Board of Directors, it requires the right climate. To date, the circumstances have not yet been right.’

In the meantime, the company is preparing thoroughly for an exit. Sondag comments, ‘Reassessing the strategy and defining key medium-term objectives are examples of those preparations. We have carefully considered what steps are needed in order to go public. We already meet many of the requirements. This is in part because of the GRI A+ status that we have achieved, which imposes strict requirements on our reporting and audit process. We use not only financial but also non-financial indicators. That is why we have opted for integrated reporting. We believe in conducting a sustainable business that is based on a proper balance between financial and non-financial performances.’

Van Gansewinkel Groep sees 2011 as the first year of growth after the crisis. Ruud Sondag, ‘A large part of the efficiency programmes will be completed this year and we can start on the road to recovery.’