NEW YORK Sims Metal Management Ltd. expects to write down about Australian $115 million ($113.6 million) in its fiscal second half, the company said late May 14.
The write-downs stem from costs related to management changes, restructuring, landfill provisions and inventory re-evaluations following an investigation launched by the New York-based company" in January (amm.com, Jan. 22).
The impact of inventory write-downs and associated landfill provisions is estimated to be around A$45 million, ($44.5 million), the company said.
"These provisions relate in part to strategies being implemented to rebase and enhance the ongoing competitive commercial profile of the business by marketing slow-moving inventories more quickly and, in other instances, to landfill certain lower-value material in the furtherance of operational efficiencies," Sims said. "This is in addition to the previously announced inventory write-downs (amm.com, Feb. 15), bringing the total inventory write-downs to be circa A$61 million ($60.3 million) for fiscal 2013."
Also contributing to the write-down was an A$8-million ($7.9-million) provision for write-downs from other "significant items," the nature of which was not disclosed by the company.
Sims anticipates an additional A$42 million ($41.5 million) in impairment charges, as "determinations are also expected to be made that the carrying value of certain fixed assets (in the United Kingdom) will exceed the value of their projected cash flows."
It also expects an impairment charge of about A$20 million ($19.8 million) to come from shuttering some facilities as part of its restructuring exercise in the United Kingdom. The company did not disclose which facilities it is likely to close; details should emerge in August during its next earnings call.