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Sims’ fiscal 1st-half earnings view dims

Keywords: Tags  scrap, Sims Metal Management, Daniel Dienst, earnings guidance, Sean Davidson


NEW YORK — Sims Metal Management Ltd. (SimsMM) has revised its earnings forecast for the first half of its fiscal year, indicating a further decline.

The company expects underlying earnings before interest, taxes, depreciation and amortization (Ebitda) for the six months ending Dec. 31 to be some 20 percent lower than its previous guidance range, putting earnings at some $88 million to $96 million. That would be between $45 million and $53 million lower year on year.

"This updated earnings guidance relates primarily to SimsMM’s assessment of recent intake volumes and its anticipated shipping program, particularly for deep-sea ferrous products, forecasted for December 2012," the company said late Tuesday.

Chief executive officer Daniel W. Dienst in November had forecast that Ebitda for the period would in a range of $110 million to $120 million for the six-month period ( amm.com, Nov. 15), suggesting a drop of $21 million to $31 million from $141 million in the same period a year earlier.

"As indicated at the annual general meeting, SimsMM anticipated relatively weak intake volumes across all regions coupled with, until recently, tepid demand by deep-sea ferrous buyers. (While) recent positive economic signals in the U.S.—including declining unemployment, positive consumer confidence data and increasing industrial production—(are) encouraging, the direct benefit to intake volumes and metal recycling margins typically follows at a lag, which will not benefit SimsMM" through the end of the year, the company said.

The New York-based company said Tuesday’s guidance is subject to variations that could relate to the timing of shipments and the impact of commodity hedging, and excludes items that might be reported related to asset sales, redundancies and other significant items.

The company expects to release its results for the fiscal first half on Feb. 15.


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