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Sims Ltd., which operates scrap metal and electronics recycling facilities in Australia?—its headquarters?—North America and the United Kingdom, says in a November trading update to investors that “soft market conditions [have] persisted” throughout its recently completed financial quarter.
The company’s fiscal year 2023 first quarter, which ran from July 1 to Sept. 30, experienced a trend that “was consistent with other industry reports and was driven by lower volumes, tighter margins, and resiliently high inflation.”
The firm continues, “Lower scrap volumes resulting from significantly reduced economic activity, coupled with increased competition for available infeed, has tightened trading margins in both percentage and dollar per ton terms.”
Despite the monthslong problems, Sims Ltd. CEO and Managing Director Alistair Field says, “We believe these are short-term headwinds driven by macroeconomic factors which do not alter our belief in, and our focus on, the medium-term outlook for the business.”
Field says Sims will need to manage the pressures in the short term but remains well-positioned for when the market recovers. “Having delivered strong earnings in the previous three financial halves, successfully transitioned from a regional to a functional organization, added new and innovative acquisitions and built significant growth in SA Recycling’s footprint provides a solid platform to work towards the 2025 business goals,” he says.
In the meantime, however, Sims indicates it “continues to be cautious in the short-term outlook,” forecasting reduced interest and taxes (EBIT) in its 2023 fiscal year first half (which aligns with the 2022 calendar year second half).
“Cost mitigation initiatives implemented [have] only partially offset inflationary pressures,” the company says, adding it is lowering its fiscal year capital expenditure budget by about AU$50 million ($32.5 million).
Looking at more distant prospects, Field says, “I have every confidence that the fundamentals for metal recycling remain positive for the medium term, with the decarbonization of steelmaking, growth of electric arc furnaces and the energy transition expected to continue driving demand.”
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