Sims Group Limited Group Chief Executive, Jeremy Sutcliffe, announced that the company had recorded an audited profit after tax for the financial year of $112.5 million, a 50 percent increase from the previous year
In accomplishing this figure the company reported sales increased 19 percent to $1.87 billion, reflecting higher metal prices, particularly during the second half. "This is a tremendous result for the company and its employees, particularly in the second half when we produced an excellent operational performance fully exploiting favorable metal prices and market conditions. All global business units produced record results, with our North American operation the standout performer trebling EBIT in US dollar terms,” Sutcliffe said.
Highlights of the year included record intake metric tons, which (excluding brokerage) were up 5 percent, shredded production, which at a record 2.2 million metric tons was up 4% and Group non ferrous intake metric tons were up by 11 percent to more than 300,000.
In the UK more than 360,000 fridges were processed, up nearly 130 percent on fiscal 2003, following the commissioning of the division's second fridge recycling plant. Surging global steel production and higher steel prices, triggered largely by a buoyant Chinese economy, was the catalyst to the second half leap in earnings. As a consequence, the bulk of this improvement came from the ferrous and shredding side of the business.
Over the full year, EBIT from this side of the business added $52 million to the result achieved in fiscal 03. Also worthy of mention are the improvements in the company's secondary aluminum business following the successful rationalization of that business in fiscal 2003 and a strong performance by ARA, the company's secondary lead joint venture with Zinifex.
The improvements in these two operations were offset somewhat by the result for Conex, the joint venture in which Sims holds a one third interest, which although EBIT and cash positive for the year, produced a return significantly lower than fiscal 2003.
Commenting on the outlook for next year, Sutcliffe concluded “We remain quietly confident that steel production and demand in China will remain firm, despite governmental and other constraints such as electricity shortages. On the back of this, we see continued demand in most major markets, including the USA where high steel prices continue to lead to high steel mill utilization rates and strong raw material requirements. Having said this, irregular buying patterns are likely to continue as consumers attempt to second guess market trends – this can only add to price volatility (although this should not reach fiscal 2004 proportions). We will continue to adapt and react to this changing business environment.” “As far as a full year outlook is concerned, it is far too early to provide an accurate forecast and indeed it would be inappropriate to do so in the light of the price volatility over the last 6 months.”