Sims Metal Management has reported sales of $1.8 billion for the first quarter of fiscal 2010, a drop of 49 percent drop from the same time in 2009. Meanwhile, the company reported net profit of $33.3 million, down 77 percent from the same time the previous year.
Daniel Dienst, SMM’s group CEO, stated, “In our first quarter we noted sequential improvement in ferrous pricing coupled with improved scrap intake, particularly as we re-asserted ourselves in the marketplace for unprocessed scrap. Non-ferrous markets were relatively firm and our Sims Recycling Solutions business executed well.”
Sims Metal Management purchased 3.6 million metric tons and shipped 3.5 million metric tons of scrap metal in the first quarter of the year, compared to 4.2 million metric tons purchased and 4.2 million metric tons shipped in the prior corresponding period. Scrap intake and shipments increased 28 percent and 16 percent, respectively, for the quarter, compared to the fourth quarter of fiscal 2009.
“We achieved significantly improved results in our first quarter due to the benefits from cost-cutting initiatives undertaken in fiscal 2009, a steadier pricing environment and a return to more normalized trading conditions. While profitable, we note continued margin pressures as industrialized, scrap-generating economies of the world suffer from an economic downturn that has diminished intake, placing upward pressure on buy prices,” Dienst added.
On a regional basis, Dienst noted that during the quarter scrap intake in North America increased by 32 percent to 2.8 million metric tons over the previous quarter. Meanwhile, operating expenses in North America declined by 23 percent during the quarter compared to the previous quarter.
In Australasia, sales dropped 32 percent to $301.3 million on the prior corresponding three month period. Scrap intake increased 18 percent from the prior quarter. Operating expenses declined by 17 percent as compared to the prior corresponding period.
“During the quarter we reopened a site in South Australia as we expand organically. The region performed well and continues to show true leadership in its market,” Dienst noted.
In Europe, sales declined 32 percent to $277 million from the same time last fiscal year. A significant portion of the profit earned in the quarter was attributable to the strong performance of the Sims Recycling Solutions business.
Scrap intake increased by 14 percent when compared to the previous quarter. Operating expenses declined by 9 percent during the quarter over the prior corresponding period.
Dienst said, “Our traditional metal recycling business in Europe continues to encounter difficult market conditions, as economic recovery in the E.U. is uneven. The division remains focused on capital improvement initiatives that will position us favorably as and when scrap markets recover. We are especially pleased with the significant progress of SRS in Europe and we are excited by the future prospects of the Technorecycle acquisition in Germany.”