• Fuel cost increases and lower activity in Middle East to impact FY26 EBIT by ~$20m
• Pricing structures and recovery mechanisms to enable recovery of substantial portion of fuel cost increases
• FY26 EBIT expected between $460m-$480m, down from previous guidance of $480m-$500m

Cleanaway Waste Management Limited (ASX: CWY) has provided a trading update on the impact of the war in the Middle East on the company's FY26 earnings outlook. The company's business model has demonstrated resilience, supported by established contractual cost pass-through mechanisms, strategic fuel supply arrangements and hydrocarbon-linked revenue streams. However, the war has resulted in higher actual and forecast direct fuel costs, higher supplier and third-party logistics costs, and decreased activity in the Contract Resources business in the Middle East. The combined adverse impact on EBIT is estimated to be approximately $20 million for FY26. As a result, Cleanaway is now expecting FY26 EBIT to be between $460 million and $480 million, down from the previous guidance of $480 million and $500 million. Importantly, this impact largely reflects timing differences in cost recovery rather than structural margin pressure, as most of the company's contracted prices will reflect recent fuel price increases by 1 July 2026, with a minority where adjustments will take effect later in FY27. Cleanaway has a range of pricing and contractual mechanisms designed to mitigate fuel price volatility, including customer contracts with fuel levies or surcharge provisions, municipal and larger commercial and industrial service contracts with periodic indexed repricing mechanisms, and pricing resets at contract renewal or extension. The effectiveness and timing of cost pass-through mechanisms vary by contract and segment, with some instances allowing for relatively quick recovery of higher fuel costs, while others may experience a lag before revised pricing takes effect.

Cleanaway is now expecting FY26 EBIT to be between $460 million and $480 million, down from the previous guidance of $480 million and $500 million.