Sims Metal today announced a statutory net loss after tax of $89 million, representing a loss per diluted share of 43.5c for the full year ended 30 June 2014. Underlying net profit after tax (NPAT) was $69 million, representing earnings per diluted share of 33.6 cents. Sales revenue of $7,129 million in FY14 was down 0.9% compared to FY13. In constant currency terms, sales revenue was down 10.5% due to lower sales volumes and lower average non-ferrous and precious metal prices.
Sales volumes of 11.8 million tonnes in FY14 decreased by 7.6% versus FY13, due in part to adverse winter weather in North America. Underlying EBIT margins nearly doubled, driven by cost reductions, divestment of underperforming operations, and early stage benefits from asset optimisation strategies. The underlying EBIT was $119 million in FY14, an increase of 77.1% over FY13.
In announcing the result, Group CEO Galdino Claro said, “The FY14 result is a positive improvement over last year in the face of still challenging market conditions. While I am encouraged by the progress we’ve made, much work still needs to be done.”
“Our stronger result was driven by solid contributions from our metals recycling businesses in Australasia and Europe, where recent investments and restructuring actions are translating into meaningfully improved earnings. These gains were partially offset by lower earnings from the e-recycling (SRS) businesses in the UK and North America. Softer earnings in North America metals recycling business were impacted by weak volumes associated with atypically severe winter weather in the second half. Despite these conditions, sales margins improved in North America as the business began to place more emphasis on transactional profitability.”
Mr Claro stated on the outlook, “The year ahead will be an exciting time at Sims Metal Management. The work towards implementing our five year strategic plan is gathering pace, with further benefits from our Streamline and Optimise phases to be delivered in FY15.”
“We expect 50% of the $32 million in annual EBIT benefits from our Streamline program will be achieved in FY15. Roughly half of this is anticipated to be realised in the Europe region, related to the exit from our historically loss making SRS business in the UK.”
All references to currencies, unless otherwise stated, reflect measures in Australian dollars.