Simsmetal Sees Strong Quarter

Simsmetal Ltd. announced the Group's unaudited profit results for the first quarter of fiscal 2003. Earnings Before Interest, Tax, Depreciation and Amortization, was $38.137 million, up 43 percent on the corresponding period of fiscal 2002. Earnings before interest and tax, was $28.207 million, up 67 percent. profit after tax was $17.992 million, up 80 percent.

Jeremy Sutcliffe, group chief executive, stated "this is an extremely strong result, with earnings not only well above the corresponding period in fiscal 2002, but also constituting a second successive record quarter result for the Simsmetal Group.

"Solid operating performances in all geographic regions, especially in Australia and the UK, coupled with ferrous prices rebounding to levels above those in the previous quarter, all contributed to this excellent result".

Shredding and other ferrous operations

"The highlight of the quarter", Sutcliffe said, "was the achievement of record shredder production across the Group, up nearly 10% on the corresponding quarter, and also above the previous quarter despite the Northern hemisphere summer shut downs.

The result was assisted further by extremely strong non ferrous recoveries and revenue from the shredding process, reflecting the continued efforts of all regions to improve operational and technological performance."

The result in Australia was particularly strong where domestic demand led to domestic sales above budgeted levels as the Group's major Australian customers also enjoyed strong order books from the construction sector.

The result in the UK was also a record, with a slight improvement over the corresponding quarter being achieved despite the disruption caused by the closure of ASW, the Group's largest UK customer. "This was particularly encouraging," said Sutcliffe.

"In the U.S., as anticipated, the improved performance in the previous quarter continued, on the back of a strong export order book and encouraging results from our Canadian joint venture".

Nonferrous operations

The Group's Australian manufacturing operations recorded an improved performance in line with expectations and on budget. The rationalization of its secondary aluminum business remains largely on schedule despite equipment shipping delays following the recent waterfront dispute on the US West Coast.

In the UK, the Group's Recycling Services division continues to tender for more Local Authority fridge contracts and has processed many thousands of units. As the plant has not reached optimum operational efficiency, its contribution to earnings is yet to be fully enjoyed.

Nonferrous metals processing and trading produced a satisfactory result despite difficult conditions, lower than budgeted terminal metal prices and continued pressure on margin.

Outlook

With the Group's ferrous sales program largely in place for the second quarter at around the levels experienced in the first quarter, Sutcliffe stated that "we are forecasting another sound result, although not at first quarter levels given a shortened processing and sales schedule and customer shut downs running up to Christmas".

In addition, "both ferrous and particularly non ferrous intake remains sluggish in the U.S. confirming our view that the economy there has not yet kickstarted" said Sutcliffe. He added "the strategic review of our U.S. business should also be completed in the second quarter".

"Overall, however, we remain confident of exceeding our budget and, provided our ferrous shipment program is executed according to plan, the Group should achieve a record operating first half EBIT".