Sims books loss for first half of financial year 2020

Alistair Field, CEO Sims Metal Management
19.02.2020 − 

Sims Metal Management has reported a sharp drop in both sales and earnings for the first half of its financial year, ended 31 December. In what CEO Alistair Field described on Tuesday as a "period that has been challenging for all recycling companies globally", Sims' revenues tumbled by nearly 19 per cent to AUD2.710bn (ca. €1.680bn). The statutory net result plunged to a loss of AUD91m from a net profit of AUD77m in the prior-year period. The global scrap metals concern put the decrease down to the "the rapid collapse in ferrous scrap prices in September 2019, combined with historically low zorba prices", which together compressed margins. 

In its UK Metals operations, Sims reported revenues of AUD488m, down nearly 17 per cent. The concern's European scrap business posted an underlying operating loss of AUD28.4m for the first financial half (H1 FY19: AUD6.8m). Sims explained that it had had set about restructuring UK scrap metal operations after "challenging management conditions in the first financial quarter", and closed 11 sites. The business was now operating out of four larger sites that together were capable of processing volumes at the level of the prior year.

Despite the drop in profitability, Sims still expects underlying EBIT for the second financial half to fall within a range of AUD40-60m, adjusting for the sale of its e-scrap compliance scheme operations in Europe. The concern noted, however, that its forecast was based on a number of favourable assumptions regarding scrap purchasing, the Turkish economy and the impact of the Corona virus on scrap markets.

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