February 20, 2024

Industry News

Sims Limited Well Poised After Challenging Period

Sims Limited (the Company or the Group) has today announced an underlying EBIT of $13.4 million for the first half of fiscal year 2024 (HY24). This is 85.6% lower compared to HY23. With the exception of Sims Lifecycle Services, underlying EBIT reduced across all businesses due to lower trading margins in Sims Metal and continued inflationary pressures. An increase in corporate costs to $62.4 million primarily related to corporate initiatives including ERP development costs and cybersecurity system upgrades, while unfavourable currency movements added circa $2 million to costs. Also included were final compensation payments for the retirement of two senior executives.

On the HY24 financial results, Group CEO and Managing Director, Stephen Mikkelsen, said, “Sims delivered a modest EBIT for HY24, driven by lower metal trading margins and inflationary pressures, partially mitigated by cost control measures. Challenging market conditions prevailed across all metal segments, with variations observed between, and within, geographic regions. Sims Lifecycle Services (SLS) performed well, delivering solid EBIT, repurposed unit growth and market share gains.

“We maintained a robust balance sheet, with adequate borrowing capacity and manageable debt levels, positioning the company favourably for future growth opportunities. Additionally, we commenced a comprehensive cost reduction program targeting annualised savings in the range of $70 million to $90 million, fortifying our financial position across economic cycles,” said Mr Mikkelsen.

Statutory EBIT for HY24 was $163.8 million, representing a decrease of 0.2% on the prior corresponding period. The statutory result included a gain of $170.4 million (net of disposal costs) following the disposal of Sims’ interest in the LMS business. Sales revenue was $4,114.4 million, an increase of 7.4% on the prior corresponding period. Sales volumes were down slightly on the prior corresponding period, with acquisition volumes mitigating the negative effects of challenging export markets. Excluding acquisitions, the decline in sales volumes was 4.9%.

On the outlook and market drivers, the Company remains confident in the business’s medium and long-term fundamentals. In the short-term, underlying EBIT is expected to improve in H2 FY24 compared to HY1 FY24 including $25 million from cost reduction initiatives. Initiatives have commenced to increase both domestic sales channels and unprocessed material in the USA. Demand for scrap in the USA is expected to remain robust, supporting prices.

For further information, visit the Sims Limited website: www.simsltd.com