Sims reports loss in FY2020 first half

Australia-based Sims Metal Management Ltd., which has its United States headquarters in Rye, New York, has released financial results for the first half of its 2020 fiscal year that show a net loss for the six-month period that ended Dec. 30, 2019.

The company says it experienced an “an underlying EBIT [earnings before interest and taxes] loss of $23.2 million Australian dollars ($15.5 million) in the first half of fiscal year 2020, compared to an underlying EBIT of $109.6 million [gained] in the first half of fiscal year 2019.”

Lower metals prices meant the global firm’s sales revenue declined by more than 18 percent in the first half of fiscal 2020 compared to the first half of fiscal 2019, according to remarks accompanying the Sims Metal Management results.

Adds the company, “Nonferrous sales volumes were stable and ferrous volumes declined 11 percent, contributing to a total sales volume of 4.5 million metric tons. The rapid collapse in ferrous scrap prices in September 2019, combined with historically low zorba prices, severely compressed margins.”

Continues the firm, “Underlying EBIT for North America Metals was break-even in the first half of fiscal year 2020 compared to the prior corresponding period. Metal margin declined due to intense competition for lower ferrous scrap inflow following a fall in ferrous prices, and weak zorba pricing, which was partially offset by higher material recovery rates and disciplined cost management.”

“This period has been challenging for all recycling companies globally,” states Alistair Field, the company’s Group CEO and managing director. He says Sims Metal Management “has responded to the challenging first-half conditions with an extensive restructuring and cost reduction program.”

Adds Field, “Our investment in sophisticated material processing facilities coincides with customers requiring higher specification products, and we are well-placed to capture an increasing share of this demand.”

Another positive cited by the firm is a new regulation in China “classifying high quality nonferrous scrap as a ‘renewable metal’ rather than ‘waste’ from July 1, 2020,” which the company says “validates the strategic push into increasing nonferrous volumes”

The company also says its Sims Resource Renewal operation “tested Sims auto shredder residue (ASR) with two technologies [that] supported previous internal rates of return and showed emissions better than regulatory requirements.”

Says Field, “I’m pleased with the progress made in advancing our growth strategy during first half of fiscal year 2020. This provides a strong foundation to make further headway [this fiscal year] and in future years.”

Sims Metal Management says profitability in the second half of its fiscal year is possible, “providing market conditions do not deteriorate further.” However, “Risks to this outcome include: 1) the impact of the coronavirus on both ferrous and nonferrous demand and prices; 2) continued aggressive competitor buy side pricing (that has recently indicated some softening); and 3) change to initial signs of positive sentiment in gradual recovery of the Turkish economy.”