Sims swings to full-year loss in challenging market
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The news: Metals recycling firm Sims has slashed its dividend after swinging to a full-year loss amid challenging export scrap metal markets.
The numbers: The company reported a net loss of $57.8 million for the year to June, down from a 181.1 million profit a year ago and worse than market expectations.
That prompted it to slash the final dividend to 10 cents a share, down 52% from a year ago. Revenue for the year was up 8.4% to $7.2 billion.
Sims shares were up 1% to $11.15 in early trading on the ASX.
The context: CEO Stephen Mikkelsen said the past year had proved challenging as the metals business faced difficult market conditions. There was an improved second-half performance at the North America Metal unit, but this was partly offset by competitive pressures in the ANZ Metal businesses.
As a result, underlying earnings slumped 83% to $42.9 million. The company had flagged lower earnings for the second half in May as scrap metal markets remained challenging, and earlier this month offloaded its UK recycling business and stake in another business for $435 million.
RBC Capital Markets analyst Owen Birrell said the company’s second-half earnings was materially higher than prior guidance but the outlook remained subdued amid challenging market conditions.
The sources: ASX announcement, RBC Research
