PITTSBURGH Sims Metal Management Ltd. said it is working on cost cutting and business building strategies in the wake of another major loss.
The worlds largest metal recycler posted a net loss of Australian $295.5 million ($304.58 million) for its fiscal first half ended Dec. 31, down from a A$633.2-million loss in the same period a year earlier, on revenue that fell 25.2 percent to A$3.43 billion ($3.53 billion) from A$4.58 billion.
The unfavorable results were driven largely by its North American segment, which saw a reduction in intake to its yards and shipments to customers. Its North America segment posted an EBIT (earnings before interest and taxes) loss of A$327.7 million ($337.98 million) vs. a loss of A$578.2 million a year earlier on revenue that fell 32.9 percent to $2.04 billion ($2.11 billion) from A$3.04 billion. The results reflected an A$283.7-million impairment charge on its North American assets (amm.com, Feb. 15
) compared with a $A568.3-million impairment charge in the first half of fiscal 2012 (amm.com, Aug. 15
The company noted that overall sales were negatively impacted by a 1.2-million-tonne reduction in shipments, mostly related to its North America assets, which saw shipments drop to 4.2 million tonnes from 5.4 million tonnes because the recent recession resulted in less scrap being generated as fewer vehicles and appliances were replaced.
While we are beginning to see improving economic fundamentals in our key scrap-generating market in the United States, the translation into stronger scrap volumes remains currently challenged as scrap generation typically lags the fundamentals, group chief executive officer Daniel W. Dienst said. We continue to chase scrap. But as you start to see the fundamentals improveauto sales, consumer confidence, appliance replacementsyoull start to see material come back into the system.
Sims is working to tighten its belt in North America. The company has already reduced monthly spending by A$4.7 million, thus exceeding a corporate goal of A$4 million in monthly reductions, and hopes to reduce controllable costs in North America by A$6 million per month by the end of its fiscal year.
The company said it had divested a Tennessee joint venture as well as nonperforming assets in Arizona and Colorado. It plans to focus on facilities on the water that can deliver higher returns, and said its Rhode Island shredder should be commissioned in September (amm.com, Aug. 14
). Targeted areas of growth include the Gulf Coast, New England, Oklahoma and Texas.
The recycler also plans to use its global presence to grow its electronics recycling platform and expand in or enter emerging economies.