Sims Metal Management Reports Strong Numbers for Fiscal Year

Sims Metal Management, based in Australia, has reported net profit after tax for the 2008 fiscal year ended June 30, 2008, of A$433.2 million (Australian dollars), up 81 percent from the same time the previous year. The figures include a contribution from the former Metal Management business for the period from March 14 through June 30, 2008, and reflects robust market conditions in the second half of the year, according to the company, resulting in record ferrous contributions toward the end of the reporting period, particularly from the company’s North American business.

The company also reported that earnings before interest, tax, depreciation and amortization were up 69.3 percent from 2007’s fiscal year to A$777.9 million. Sales revenue was up 38.2 percent compared to the prior year to A$7.67 billion. Sales tonnage increased by 22 percent to 11.7 million metric tons, mainly reflecting the contribution from the former Metal Management business in the fourth quarter. Net profit after tax for the quarter was A$250.6 million, and EBITDA was $420.8 million, up 212 percent and 189 percent respectively for the quarter ended March 31, 2008.

“Fiscal 2008 was a remarkable year, with record performance and outstanding growth,” Daniel Dienst, Sims Metal Management’s CEO, says. “The merger between Sims Group and Metal Management was the obvious highlight, but a further eight acquisitions were completed during the year across all regions in both metal recycling and e-recycling,” he adds. “The Sims-Adams joint venture in Southern California, which was established in the first half of the year, has already delivered significant value and offers great opportunity for future growth.”

Market conditions in North America were favorable during the second half of the year, particularly toward the end of the third quarter and throughout the fourth quarter, according to a press release issued by Sims Metal Management. Sales revenue was up 56.8 percent on the prior year to A$4.61 billion but, in U.S. dollar terms, it was up by 82.8 percent. Similarly, on a comparative basis, EBIT was up 137.6 percent to A$437.4 million, with the increase being 175.3 percent.

Excluding the contribution from the former Metal Management business from March 14, 2008, EBIT was up 55.9 percent to A$287 million in fiscal year 2007, with the increase being 77.6 percent in U.S. dollar terms. Total metric tons (ferrous and nonferrous) processed and brokered in North America in fiscal year 2008 increased 33 percent compared to fiscal year 2007, to about 7.9 million metric tons.

For the fourth quarter, EBIT was up by 456.2 percent to A$294.9 million relative to the previous quarter, with the increase being 456.8 percent in U.S. dollars.

Total metric tons processed and brokered in North America in the fourth quarter increased 116 percent, quarter on quarter, to approximately 3.3 million metric tons.

“The operating results from North America for the year were outstanding and mainly reflect an extremely strong ferrous performance from virtually all business units across the region, particularly in the fourth quarter,” Dienst says.

Sims Metal Management’s Executive Director Jeremy Sutcliffe adds, “Our Australian business has again performed admirably, consolidating its position as the leading recycler in the country. The strength of the Australian business is reflected in the 13 percent increase in ferrous tonnage physically handled, and the 4 percent increase in non ferrous metric tons traded, compared to last year.”

The company’s European operations also reported record performance in the 2008 fiscal year, with EBIT increasing by 39.7 percent year on year to A$97.9 million on sales revenue of A$1.31 billion (up 14.6 percent on the prior year). The region’s performance was even stronger in pounds sterling, with EBIT and sales revenue growth up by 55.9 percent and 29 percent respectively.

“The second half of the year saw our European metal recycling operations take full advantage of the favorable ferrous market conditions to record an exceptional result, Sutcliff says. “Year on year, ferrous intake grew impressively by 16 percent and nonferrous volumes more so, by 34 percent. Recycling Solutions continued to grow, with European EBIT up by 17.6 percent, in Australian dollar terms, on the previous year.”

Sims Recycling Solutions (SRS) growth continued, with EBIT up 38.3 percent on the previous year to A$89.6 million and sales revenue of A$559.2 million, up 28.9 percent. The result reflected a full year contribution from the businesses acquired in fiscal year 2007, strong metal prices (particularly for precious metals) and an initial contribution from the new “life cycle management” area of the business.

Sutcliffe says, “SRS’ growth continues to exceed our internal target of 25 percent per annum. The opportunities to develop this business are enormous, organically, through industry consolidation and also through internal leveraging with our metal recycling businesses. For the year, the division’s EBIT contribution to the enlarged company represented 13.1 percent of group EBIT.”