PITTSBURGH Lower selling prices and fewer shipments continued to wreak havoc on Sims Metal Management Ltd.s bottom line, but the worlds largest metal recycler has narrowed its losses.
The company, based in New York and Sydney, expects improvement over the next 12 months and said it plans to pick a new chief executive officer by the end of September.
Sims posted a net loss of Australian $466.1 million ($421 million) for its fiscal year ended June 30, 25.1 percent lower than a A$622.5-million loss the previous year, on revenue that fell 20.4 percent to A$7.19 billion ($6.49 billion) from A$9.04 billion.
While the overall company still faces headwinds, its North American segment has shown some improvement due to better margins and cost reductions through corporate discipline, Sims said, and expects to see the results of cutting costs and working to widen margins over the next fiscal year.
"Management expects the benefits of portfolio optimization strategies implemented in North America, including the divestiture of under-performing businesses since the start of (fiscal 2013), will begin to take hold in (fiscal 2014)," it said.
Earnings before interest and taxes by Sims North American metals segment improved 46.6 percent, with a A$328.8-million ($296.7-million) loss vs. a A$615.9-million loss a year earlier on revenue that fell 24.8 percent to A$4.53 billion ($4.09 billion) from A$6.03 billion due to a mix of lower sales tonnage and declines in ferrous and nonferrous metal prices. The segment was able to cut A$48.4 million ($43.7 million) in costs.
The North America group shipped 9.38 million tonnes with a 15.4-percent margin in the 12 months ended June 30 vs. 11.08 million tonnes with an 11.7-percent margin in fiscal 2012.
Scrap markets remain volatile, but the companys deep-sea ferrous and nonferrous trading activity is firm. Demand increased for the companys West Coast export business in August following lackluster demand in July, while selling prices on the East Coast increased $30 per tonne in July and another $10 in August.
Sims is optimistic that improved performance in North America is a sign of progress in scrap generation fundamentals.
Auto sales are on track to reach 15.9 million vehicles in 2013 and appliance sales from January to June were up 7 percent compared with the first six months of last year. Autos and appliances can account for 50 to 70 percent of shredder feed, the company said.
Sims said it expects to name its new chief executive officer by the end of the quarter. A global leadership team, which has been overseeing the companys activity since the June 30 retirement of chief executive officer Daniel W. Dienst, has narrowed its search to a group of external candidates.