Liverpool, UK — Latest published accounts for the year to end 2015 show that one of the UK’s prominent metal recyclers, S. Norton & Co Ltd has been hit by the global steel industry crisis. Annual turnover reduced to £139 million for the year to 31 December 2015, down from £228 million a year earlier as a direct consequence of scrap steel prices dropping from £245 to £140 per tonne over that period. The company reported a £27.6 million post-tax loss for 2015 compared with break-even in 2014.
The principal reason for the exceptional loss posted in the 2015 accounts was a write-down in the value of the company’s substantial metal stocks. In particular, the company had holdings of some higher value scrap grades at the year-end which, although seeing some of the worst price reductions, are expected to recover strongly when markets improve. It blamed the loss on the slump in the world price of steel and other metals as a result of excess production in China and the global economic slowdown. This is the same crisis that triggered the break-up of the UK’s biggest steelmaker, Tata Steel.
Exceptionally challenging last year
In his financial report, John Norton, Chairman described the company’s last financial year as ‘exceptionally challenging’, sharing the recent experiences of other major scrap metal processors in the UK. John Norton commented: “Despite this loss, the company managed to significantly reduce its bank debt during the year, and indeed through much improved trading in 2016 we have now managed to achieve a cash positive position. During 2015, we also continued to invest in high quality processing equipment at all our sites, as part of our commitment to creating a stable long-term future for the business.”
The family-run firm has long-established metal recycling operations across the UK in Liverpool, Manchester, London and Southampton. It recently restructured, with the addition of four new Board Directors and promotion for Armen Arslanian, Commercial Manager, so that the owners John, Charlie and Matt Norton can devote more time to strategy and longer-term direction of the business.
Need to invest for the future
Prudent management left the company in a strong position at the end of 2015, according to Charlie Norton, Purchasing Director: “Trading for the first half of 2016 has been profitable and the company is currently generating strong cash flows. We recognise the need to invest for the future and are expecting to develop the business in a number of new directions over the next few years.”
Commenting on any potential impact following the vote to leave the European Union, Charlie Norton added: “In the months immediately after the Brexit vote, we haven’t seen a huge reduction in scrap volumes and of course the fall in the value of sterling is a help to exporters like us. However, a weaker economy could mean less scrap is generated in the medium term.
“I think everyone is waiting until we get further economic data before working out whether there really is loss of confidence in the economy and what impact, if any, this may have.”
Source: S. Norton & Co. Ltd.