Sims Group Limited (ASX:SGM) (NYSE:SMS):
Highlights
Unaudited sales revenue of $4.432 billion up 10.4% on FY07
Unaudited EBITDA of $357.1 million up 11.3% on FY07
Unaudited EBIT of $298.1 million up 12.6% on FY07
Unaudited NPAT of $182.5 million up 11.2% on FY07
Unaudited record NPAT of $80.3 million for Q3 FY08
Completion of Metal Management merger, with business integration and
synergy realisation underway
Strong outlook for Q4 FY08. Earnings will exceed those in Q3 FY08
prior to any extraordinary expenses or other costs that may be
recorded in connection with the Metal Management merger
Sims Group Results for 9 months to 31 March 2008
Sims Group Limited Group Chief Executive Officer, Daniel Dienst
announced today that the Company´s unaudited
NPAT (net profit after tax) for the nine months to 31 March 2008 was
$182.5 million, up 11.2% on the prior corresponding period.
Unaudited EBITDA (earnings before interest, tax, depreciation and
amortisation) and before charges that may be recorded in connection with
the merger transaction with Metal Management, was up 11.3% on the prior
corresponding period to $357.1 million. Unaudited sales revenue was up
10.4% on the prior corresponding period to $4.432 billion. Sales tonnes
increased moderately by 3% to 7.33 million tonnes.
Unaudited NPAT for the quarter ended 31 March 2008 was $80.3 million and
unaudited EBITDA was $145.7 million, up 62.3% and 44.1%
respectively on the quarter ended 31 December 2007.
The result includes a contribution from the former Metal Management
business for the period 15 March 2008 to 31 March 2008. This assisted in
delivering record earnings for the quarter.
Mr. Dienst said: "The result reflects the
vastly improved ferrous trading conditions experienced over the third
quarter, with strong prices for ferrous scrap globally, more than
offsetting the impact of the continuing strength of the Australian
dollar. It marks an exciting time for the 6,000 men and women of the
combined Sims Metal Management as two industry leaders have joined
together to create one truly global leader."
Australia, New Zealand & Asia
Sales revenue for the region was up 9.1% to $1.174 billion. Although
EBIT (earnings before interest and tax) and pre-amortisation of other
intangibles, was down slightly by 3.3% to $107.8 million compared to the
prior corresponding nine month period, it rose strongly compared to the
December quarter by 41.6% to $42.6 million. As with the Group as a
whole, improved ferrous margins was the major contributor to this
improvement.
North America
Sales revenue was up 26.9% in US dollar terms on the prior corresponding
period to US$2.09 billion but, after translation into Australian
dollars, was only up by 10.7%. Similarly, on a comparative basis, in US
dollar terms, EBIT (pre-amortisation of other intangibles) was up 32.4%
to US$128.3 million, although this increase was only 14.1% after
translation into Australian dollars.
Mr. Dienst said: "The completion of the merger
with Metal Management was the key event in the quarter although, with
Metal Management closing off its books on 14 March 2008, the timing was
such that only two weeks´ profit contribution
is included in this result. It is worth noting, however, for the record
that the EBITDA generated by the former Metal Management businesses for
the period from 1 January 2008 through 14 March 2008 was also a record
US$70.0 million, justifying the confidence expressed at that company´s
last results announcement in February this year."
Europe
In Europe, the improvement in the quarter compared to the previous
quarter was the greatest across the Group. After a challenging December
quarter, particularly from the metal recycling division, EBIT
(pre-amortisation of other intangibles) rose by 90.7% to GBP16.4
million. For the nine months, sales revenue was up 24.9% in pounds
sterling on the prior corresponding period to GBP412.7 million, but only
up 11.6% after translation into Australian dollars. EBIT
(pre-amortisation of other intangibles) was up 57.0% to GBP29.2 million
with the increase being 41.2% after translation into Australian dollars.
Sims Recycling Solutions
The contribution of Sims Recycling Solutions to revenue and profits was
again encouraging. Sales revenue of $435.9 million was up 38.7% on the
prior corresponding period and EBIT (pre-corporate costs and
amortisation of other intangibles) of $72.1 million, was up 66.2%. This
result represented 24.2% of Group EBIT (pre-corporate costs and
amortisation of other intangibles), well within the Company´s
target range of 20% - 25% of Group EBIT, although, following the Metal
Management merger, the relative contribution of SRS will decline in the
short to medium term.
Metal Management Merger Integration Update
As previously advised, the Metal Management merger was completed on 14
March 2008.
The integration process is proceeding according to schedule. A new
management structure for the combined North American business has been
announced, with Bob Kelman, President, Commercial North America and Alan
Ratner, President, Operations North America jointly leading the
business, reporting to Mr. Dienst.
Mr. Dienst said: "The North American
integration plan is proceeding according to plan with no surprises and
we remain confident that the $35 million of operational synergies should
be accomplished in fiscal 2009 and commercial synergies should be
identifiable in coming months and quarters."
Outlook
Mr. Dienst said: "Demand and pricing from
consumers for our ferrous and non-ferrous metals is robust and freight
rates have stabilised, albeit still at historically high levels, which
is supportive of an expectation for attractive operating conditions in
our fourth fiscal quarter. While we have not yet seen visibility to our
consolidated April results or been able to form a conclusive opinion
about the North American market (which tends to be a spot market
determined monthly where variations can be significant) for the month of
June, firm demand and prices in April and May are encouraging.
"The continued strength of the Australian
dollar could continue to provide head winds for the conversion of local
currencies to reported earnings. Notwithstanding the potential impact of
foreign currency translation, because of the full three month
contribution of earnings from Metal Management we believe our fourth
quarter performance will exceed the quarter just posted subject to any
extraordinary expenses or other costs that may be recorded in connection
with the Metal Management merger, but because of the potential for
volatility in prices and freight rates, which over recent quarters has
been unprecedented, we are unable to provide more precise estimates."
Cautionary Statements Regarding Forward-Looking Information
This release may contain forward-looking statements, including
statements about Sims Group Limited´s
financial condition, results of operations, earnings outlook and
prospects. Forward-looking statements are typically identified by words
such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project" and
other similar words and expressions.
These forward-looking statements involve certain risks and
uncertainties. Our ability to predict results or the actual effects of
our plans and strategies is subject to inherent uncertainty. Factors
that may cause actual results or earnings to differ materially from
these forward-looking statements include those discussed and identified
in filings we make with the Australian Securities Exchange and the
United States Securities and Exchange Commission, including the risk
factors described in the Registration Statement on Form F-4 we filed
with the United States Securities and Exchange Commission on 8 February
2008.
Because these forward-looking statements are subject to assumptions
and uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements. You are
cautioned not to place undue reliance on these statements, which speak
only as of the date of this release.
All subsequent written and oral forward-looking statements concerning
the matters addressed in this release and attributable to us or any
person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this release.
Except to the extent required by applicable law or regulation, we
undertake no obligation to update these forward-looking statements to
reflect events or circumstances after the date of this release.
About Sims Group Limited
Sims Group (www.sims-group.com)
is the world´s largest listed metal recycler
with over 200 operations globally. Sims´ core
business is metal recycling, with an emerging business in recycling
solutions. Sims earns around 80 per cent of its revenue from
international operations in the United Kingdom, Continental Europe
North America, New Zealand and Asia. Sims has over 6,000 employees, an
annual turnover of $8.5 billion and has its ordinary shares listed on
the Australian Stock Exchange (ASX CODE: SGM) and its ADRs listed on the
NYSE (NYSE SYMBOL: SMS).
