Sales revenue for Europe Metals in FY16 was 27 percent lower compared to FY15. At constant currency, sales revenue was 32 percent lower compared to FY15 primarily due to lower average selling prices and sales volumes. Underlying EBIT of $18.6 million in FY16 was 24 percent lower compared to FY15, says the annual report 2016 of Sims Metal Management Limited concerning Europe.
„The market conditions of fiscal year 16, particularly at the end of the first half, were not only the most difficult during my time at Sims Metal Management, but perhaps the toughest the industry has seen in the past 30 years“, balanced Galdino Claro, Group CEO and Managing Director.
„Slowing domestic steel consumption in China saw a wave of excess production dumped into global markets“, commented Chairman Geoff Brunsdon. So the availability of cheap Chinese billet eroded demand for ferrous scrap metal from steel mills outside China. „At the same time, an oversupply of low-cost iron ore helped pushed down the price of ferrous scrap by over $30 per tonne during October to the lowest level since 2003.“
According to Geoff Brunsdon, these factors contributed to an 18 percent drop in Sims’ sales volumes in FY16. The Company rapidly took action to reset its operating platform by selling, closing or mothballing marginal operations and by continuing to remove costs from the business. In total, 42 loss making or non-core facilities were targeted for sale or closure, and controllable costs were reduced across the remaining operations. Geoff Brunsdon: „The resetting actions led to a meaningful improvement in earnings, from an underlying NPAT loss of $18 million in 1H FY16, to a profit of $56 million in 2H FY16. However, for the full year FY16, NPAT of $38 million was 63 percent lower than the prior year.“
In spite of that, he underlined that „The nature of our businesses and the strength of our CEO, our leadership team and our people – combined with the global nature of our operations and the robustness of our five-year strategic plan – all support sustainable innovation and growth. Sims Metal Management embraces circular economy principles as the road to value creation for tomorrow’s leaner, more resilient, sustainable and transparent company.“
And Galdino Claro is sure that Sims Metal Management will „continue to improve our performance on a variety of key sustainability metrics and remain committed to be a global leader in sustainability.“ The Group is proud of a long positive record of sustainability and corporate responsibility. „Having exceeded our 2009 long-term sustainability goals, we have recently embarked on a new set of 2020 sustainability goals.“
The full annual report 2016 can be downloaded under amazonaws.com.
Source: Sims Metal Management Limited