Safety Failures Trigger Executive Pay Cuts Amid Cleanaway’s Growth Ambitions
Cleanaway Waste Management faced a challenging FY25 with multiple fatalities prompting a safety overhaul, yet reported robust financial growth and reaffirmed FY26 guidance. Strategic acquisitions and operational improvements signal a determined path forward.
- Three fatalities in FY25 plus recent fatality at Coolaroo facility
- 14.6% underlying EBIT growth to $411.8 million
- 16.2% increase in underlying NPAT to $196.4 million
- Board applies significant downward adjustments to executive incentives due to safety performance
- Completed acquisitions of Citywide Services and Contract Resources early FY26
Safety Challenges and Accountability
Cleanaway Waste Management’s 2025 Annual General Meeting was marked by a sober acknowledgment of the company’s safety record. The past financial year saw three fatalities within its operations, with a recent tragic death of a contracted driver at the Coolaroo Material Recovery Facility in Victoria. Chairman Philippe Etienne and CEO Mark Schubert expressed deep condolences and accepted full accountability, emphasizing that safety is foundational to the company’s identity and operations.
In response, Cleanaway has accelerated its safety transformation journey initiated in mid-2023, commissioning an independent external review of its health, safety, and environment (HSE) strategy. The Board also applied a 30% downward adjustment to executive short-term incentives, reflecting the gravity of the safety outcomes despite strong financial performance.
Financial Performance Amid Adversity
Despite the safety setbacks, Cleanaway delivered a strong financial year. Underlying earnings before interest and tax (EBIT) grew 14.6% to $411.8 million, supported by a 130 basis point margin improvement to 12.5%. Underlying net profit after tax (NPAT) rose 16.2% to $196.4 million. The company declared a 20% increase in dividends to six cents per share, reflecting confidence in ongoing earnings growth and cash flow generation.
Statutory NPAT remained flat, impacted by one-off costs including a $23.2 million charge from a fire at the Christie Street liquid waste facility. Return on invested capital (ROIC) improved to 6.0%, underscoring disciplined capital management and operational focus.
Strategic Acquisitions and Operational Excellence
Early in FY26, Cleanaway completed two significant acquisitions – Citywide Services for $110 million and Contract Resources for $377 million. These purchases align with the company’s strategy to secure unique assets and accelerate growth in specialist industrial services. Both acquisitions are expected to contribute approximately $30 million EBIT in FY26 and are being integrated smoothly.
Operationally, Cleanaway is investing heavily in fleet transformation, technology, and safety systems, including in-cab vehicle monitoring and enhanced driver training. The company’s five-year HSE strategy is showing early signs of success, with serious injury frequency rates and total recordable injury frequency rates improving significantly in the second half of FY25 and into FY26.
Outlook and Market Position
Cleanaway reaffirmed its FY26 underlying EBIT guidance of $470 million to $500 million, noting that earnings are expected to be weighted to the second half due to operational initiatives and acquisition synergies. The company is also undertaking an indirect cost reduction program to create a leaner, more efficient business.
As Australia’s leading waste management company, Cleanaway benefits from a large, integrated network and a resilient recurring revenue base. The company’s focus on safety, sustainability, and disciplined capital allocation positions it well to navigate evolving regulatory and market demands.
Bottom Line?
Cleanaway’s path forward hinges on translating safety commitments into lasting cultural change while leveraging strategic acquisitions to fuel growth.
Questions in the middle?
- What will be the findings and recommendations of the ongoing external safety review?
- How effectively will Cleanaway integrate Contract Resources and Citywide Services to meet growth targets?
- What impact will the indirect cost reduction program have on operational efficiency and margins?
