Sims Metal Management reports profitable fiscal year

Sims Metal Management reports profitable fiscal year

Global scrap company says its underlying net profit grew by 60 percent in fiscal 2018.

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August 27, 2018
Edited by Brian Taylor

Australia-based Sims Metal Management has reported sales revenue that grew by nearly 27 percent and underlying net profit after tax (NPAT) that rose by 60 percent in its 2018 fiscal year compared with the year before. The company’s 2018 fiscal year ended June 30, 2018.

“We are very pleased with the strong improvement in profitability on the back of the performance of our North America and Australia and New Zealand operations,” says Sims Metal Management Group CEO and Managing Director Alistair Field. “Our investment in sophisticated material processing facilities coincides with customers requiring higher specification products, and we are well placed to capture an increasing share of this demand."

The company’s underlying NPAT of AU$192 million ($140.9 million) resulted in earnings per share of 93.2 Australian cents (68.4 cents), up from 59.9 Australian cents (43.4 cents) the prior fiscal year.

Sims Metal Management’s sales revenue of AU$6.45 billion ($4.73 billion) in its fiscal 2018 was 27 percent higher compared with the 2017 figure. The company credits increased volumes and higher average sales prices for the boost.

Geographically, the company says its underlying earnings before interest and taxes (EBIT) improved in its North America Metals, Australia and New Zealand Metals and Global E-Recycling business units, and it points to higher income from the company’s investments in United States-based SA Recycling and Australia-based renewable energy unit LMS Energy as positive factors.

The positive results were “partially offset by lower underlying EBIT from the Europe Metals segment,” states the firm. In Europe, “Despite higher sales volumes, in part due to the acquisition of Morley Waste Traders, competitive pressure for intake volume was a key factor leading to the profit decline,” Sims states in notes accompanying its results.

In the outlook section of its report, Sims Metal Management refers to the possibility of further escalations in global trade wars potentially having an impact on commodity prices and volumes. “This uncertainty is clearly a caveat that needs to be considered in the outlook for fiscal year 2019,” the company says.

Sims expresses concern about United States tariffs on Turkish steel but adds, “Our strategic push to produce better quality and more disaggregated product is expected to result in continued profitable business into China.”

Writing nearly two months into the first quarter of its fiscal year 2019, Sims Metal Management states, “Based upon our current expectations for demand and pricing, we remain positive about the remainder of fiscal year 2019, but there are many variables that could have an impact over this period.”