Australia-based Sims Ltd., which has extensive scrap metal and electronics recycling operations in the United States, has announced it is expecting its underlying earnings before interest and taxes (EBIT) for its fiscal year 2021 to be between $360 million and $380 million.
That represents a boost of up to $120 million compared with the firm’s previous guidance range of between $260 million and $310 million, offered in mid-April. The company’s 2021 fiscal year runs from July 1, 2020, to June 30, 2021.
“The company’s business divisions are now forecasting to maintain the excellent third-quarter results right through the fourth quarter,” Sims says. It adds that market conditions described in an April 2021 update remain in force, including:
- scrap intake volumes for the second half of its fiscal year have remained at around 95 percent of fiscal year 20119 average monthly volumes, compared with just 85 percent in the first half of the current fiscal year;
- a general improvement in gross margin per ton because of higher scrap prices, combined with what Sims cals good margin management; and
- a significant contribution from SA Recycling in the U.S., driven by high scrap prices, particularly for mixed shredded metals products (such as zorba), good intake volumes and good margin management.
“In our April release, we factored in justifiable concerns that the rapid rise in prices commencing in December 2020 contributed to exceptional EBIT that would not be sustained in the fourth quarter,” comments Alistair Field, CEO and managing director of Sims. “It is pleasing that this is not the case, and we are forecasting the fourth quarter to be as strong as the third quarter.”
The company says risk remaining as a potential barrier to achieving its forecasted 2021 fiscal year results involves delivering on the assumed June shipping schedule, as the global shipping situation continues to be in turmoil.