Positive improvement: Sims announced fiscal 2014 full year results

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Source: Sims Recycling Solutions

Sydney, Australia, New York — Sims Metal Management Ltd has announced fiscal 2014 full year results. Sims balanced a statutory net loss after tax of $89 million, representing a loss per diluted share of 43.5c for the full year ended 30 June 2014. Underlying net profit after tax was $69 million, representing earnings per diluted share of 33.6 cents.

Sales revenue of $7,129 million in FY14 was down 0.9 percent compared to FY13. In constant currency terms, sales revenue was down 10.5 percent due to lower sales volumes and lower average non-ferrous and precious metal prices. Sales volumes of 11.8 million tonnes in FY14 decreased by 7.6 percent versus FY13, due in part to adverse winter weather in North America. Underlying EBIT margins nearly doubled, driven by cost reductions, divestment of underperforming operations, and early stage benefits from asset optimisation strategies. Underlying EBIT was $119 million in FY14, an increase of 77.1 percent over FY13.

In announcing the result, Group CEO Galdino Claro said, „The FY14 result is a positive improvement over last year in the face of still challenging market conditions. While I am encouraged by the progress we’ve made, much work still needs to be done.“

Improved earnings in Australasia and Europe

The Group CEO added: „Our stronger result was driven by solid contributions from our metals recycling businesses in Australasia and Europe, where recent investments and restructuring actions are translating into meaningfully improved earnings. These gains were partially offset by lower earnings from the e-recycling (SRS) businesses in the UK and North America. Softer earnings in North America metals recycling business were impacted by weak volumes associated with atypically severe winter weather in the second half. Despite these conditions, sales margins improved in North America as the business began to place more emphasis on transactional profitability.“

„Underlying EBIT for Europe of $20 million was a well-earned turnaround from a loss of $19 million in the prior year. The improvement was driven by stronger earnings from UK Metals where previously undertaken restructuring actions have gained traction, providing a substantial positive impact on operational efficiency. These improvements were offset in part by continued losses from UK SRS, which necessitated our recent decision to materially exit that business.“

Weaker earnings in North America

„Despite the margin improvement already referred to, underlying EBIT for North America of $13 million was down from $34 million in FY13, due to weaker earnings from both Metals Recycling and SRS, and abnormally severe winter weather impacting volumes. Through the year, we continued to takes steps to streamline North America, including the exit from our non-core Aerospace Metals, Alabama and Utah businesses, loss making Gulf region metals recycling business, as well as our loss making SRS operations in Canada.“

Outlook: Expansionary capex for FY15 expected

Galdino Claro stated on the outlook: „The year ahead will be an exciting time at Sims Metal Management. The work towards implementing our five year strategic plan is gathering pace, with further benefits from our Streamline and Optimise phases to be delivered in FY15. We expect 50 percent of the $32 million in annual EBIT benefits from our Streamline program will be achieved in FY15. Roughly half of this is anticipated to be realised in the Europe region, related to the exit from our historically loss making SRS business in the UK.“

„FY15 capex is expected to be between $100 million to $120 million, with expansionary capex devoted to projects directly aligned with achieving the Optimise goals set out in our strategic plan. Expansionary projects planned for FY15 include the new yard and shredder plant in Western Australia, and upgrade investments at three of our non-ferrous metal recovery plants in North America. At this early stage of trading in FY15, intake volume has shown minor sequential improvement across all regions we operate. Despite results so far in FY15 being consistent with plan, we remain of the view that conditions in the near-term will remain constrained“, Galdino Claro explained finally.

Sims Metal Management is the world’s largest listed metal recycler with over 250 facilities and 6,000 employees globally. Sims‘ core businesses are metal recycling and electronics recycling. Sims Metal Management generates approximately 60% of its revenue from operations in North America.

Source: Sims Metal Management