New York, USA — The first fiscal half year 2018 results of Sims Metal Management show a sales revenue of $2,977 million that was 25 percent higher compared to first fiscal half year 2017. The result was driven by stronger sales volumes and higher commodity prices. In constant currency terms, sales revenue was 27 percent higher than the prior half year, while sales volumes increased 9 percent to 4.8 million tonnes, due to increased demand from export markets.
The continued growth in earnings and return on capital include underlying EBIT of $124 million, up 60 percent over prior half year, underlying NPAT of $81 million thst was up 36 percent over prior half year, and an underlying return on capital of 10.5 percent, on track to exceed full year target set in FY13.
Europe Metals underlying EBIT of $13 million in first fiscal half year 2018 was down slightly from $16 million in first fiscal half year 2017. Sales volume growth of 6 percent was supported by a new deep-sea port facility in Southeast UK, which opened in August 2017. Stronger sales volumes were, however, more than offset by lower metal margins.
Global E-Recycling underlying EBIT of $7 million in first fiscal half year 2018 was down from $11 million in previous year`s period. Improved performance in the US, due to cost reductions and benefits from recent operational restructuring, was more than offset by margin compression in Continental Europe. Margin pressure in Continental Europe is anticipated to ease in first fiscal half year 2018.
Accordingto Sims, external market conditions continue to show steady signs of improvement. Steel exports from China have now declined 40 percent since the mid-2016, easing what was previously a significant headwind impacting global demand for ferrous scrap. Moreover, policy reform in China aimed at improving the health of the steel industry and the environment is expected to be beneficial to secondary metal demand. Already, this reform has led to increased demand and price premiums for high-grade raw materials such as ferrous scrap.
Improved demand in both domestic and export markets has contributed to a 30 percent increase in ferrous scrap prices since the end of FY17, with pricing and demand continuing to remain firm thus far in second fiscal half year 2018.
Based on current market conditions and benefits from internal initiatives, Sims
expects to exceed its long-standing target of underlying return on capital of 10 percent for the full fiscal year 2018.
Source: Sims Metal Management