Smorgon Steel Reports Earnings Increase

Smorgon Steel,  one of the largest metal recycling firms in the world, reported profit for the year increase by 23 percent from figures the previous year.

The company reported a net profit after tax of $103.2 million, a 104.4 percent increase from the previous year.

Despite the jump in earnings, the company reported total sales for the Group declined by 5.7 percent, from $2.7 billion to $2.5 billion. However, the company noted the sales decline was due to the selling off of non-core businesses. For companies in its continuing, core businesses the company reported sales increased by 5.9 percent to $2.4 billion.

While the company reported decent numbers for the year, the company also noted that it is feeling the effect of scrap metal and hot-rolled coil, as well as the higher Australian dollar, which is making imports less expensive for the company’s competitors.

During its annual meeting, the company noted that the average price for scrap was 34 percent greater than the previous year, while the average price for hot-rolled coil in Asia was 54 percent higher.

A problem has been that the company is not able to pass on the record high prices to its consumers at one time, meaning any price increases will come more gradually.

Additionally, a higher Australian dollar is allowing competitors of the company to buy imported scrap at prices less than those Smorgon pays.