Cleanaway Waste Management Ltd (ASX: CWY) shares are having a difficult day on Tuesday.
In afternoon trade, the ASX 200 share is down over 4% to $2.66.
This compares to a 0.8% gain by the S&P/ASX 200 Index (ASX: XJO) at the time of writing.
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Why is this ASX 200 share tumbling?
Firstly, not all readers will be familiar with Cleanaway Waste Management.
It is Australia's leading waste management, industrial, and environmental services company.
The $6 billion company has a team of over 10,000 people operating across more than 350 locations in Australia, New Zealand, and the Middle East. The ASX 200 share manage Australia's largest waste and industrial services fleet, with over 6,400 vehicles, which are supported by an extensive network of recycling facilities, transfer stations, engineered landfills, liquid treatment plants, and refineries.
Trading update
Investors have been selling Cleanaway's shares on Tuesday after the company released a trading update ahead of its annual general meeting.
As you might have guessed from the underperformance of its share price today, that trading update was not a very positive one.
Unfortunately, trading conditions have been subdued during the first quarter of FY 2026. As a result, its earnings in the first half are expected to be softer than usual.
However, despite this softer half, the ASX 200 share is sticking with its earnings guidance for the full year. It notes that its FY 2026 EBIT is expected to be weighted more heavily to the second half than the typical split of recent years.
Cleanaway continues to forecast underlying earnings before interest and tax (EBIT) of between $470 million and $500 million for FY 2026. This represents a 14% to 21% increase on the $411.8 million it recorded in FY 2025.
Management appears to be betting on an indirect cost reduction program saving the day. It is now underway, with details of the program to be provided when its first-half results are released in February.
Commenting on the update and its cost reduction program, the company's CEO and managing director, Mark Schubert, said:
While trading conditions in the September quarter were subdued, we know what needs to be done and are confident in our ability to deliver our FY26 earnings guidance.
Importantly, the indirect cost review provides the opportunity to sustainably reduce our indirect costs and create a leaner, more efficient business to sharpen our focus on customer experience and to drive earnings to cash.
Following today's weakness, this ASX 200 share is now down 9% since this time last year.
