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SIMS LIMITED — Interim / Quarterly Report 2008
Feb 21, 2008
65780_rns_2008-02-21_fa944938-1a96-44a4-a71f-a7e0d7a9fe3a.pdf
Interim / Quarterly Report
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FINANCIAL RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2007
building the world’s leading recycling company . . .
Sims Group Limited ASX Code: SGM
Jeremy Sutcliffe, CEO Ross Cunningham, CFO
22 February 2008
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Disclaimer
This presentation for Sims Group Limited is designed to provide a high level overview of aspects of the operations of Sims Group Limited. The material set out in the presentation is current as at 22 February 2008.
The presentation may contain forward looking statements about assumptions, estimates and outcomes, which are based on internal business data and external sources. Given the nature of the industry, business risks, and other factors, the assumptions, estimates and outcomes are uncertain. They may be affected by internal and external factors which may have a material effect on future business performance and results. No assurance or guarantee is, or should be taken to be, given in relation to the future business performance or results of Sims Group Limited or the likelihood that the assumptions, estimates or outcomes will be achieved.
While management has taken every effort to ensure the accuracy of the material in the presentation, the presentation is provided for information only. Sims Group Limited, its officers and management exclude and disclaim any liability in respect of anything done in reliance on the presentation.
You should make your own enquiries and take your own advice (including financial and legal advice) before making an investment in the company’s shares or in making a decision to hold or sell your shares.
Please note that all references to $ or dollars herein are references to Australian dollars, unless otherwise indicated.
2
Agenda
-
CEO Overview – Jeremy Sutcliffe 2. Financial Results – Ross Cunningham 3. Markets & Outlook – Jeremy Sutcliffe
-
Questions
3
building the world’s leading recycling company . . .
CEO Overview Jeremy Sutcliffe
Highlights
-
Sales revenue of $2.73 billion up 4.0% on HY07
-
EBITDA of $211.3 million down 3.6% on HY07
-
Net profit after tax of $102.2 million down 9.5% on HY07, in line with previous guidance after taking into account the recently-announced change in accounting treatment
-
Earnings per share of 81.1 cents down 10.5% on HY07, again after taking into account the recently-announced change in accounting treatment
-
Interim dividend per share of 55 cents (47% franked) down from 60 cents per share for HY07
-
Record date for payment of dividend set at 20 March 2008
-
Metal Management stockholder meeting to approve merger to be held on 14 March 2008, with closing scheduled to be effected by 17 March 2008
-
Ferrous margins adversely affected by high ocean freight rates, a weak US dollar and continued buy price competition. Non ferrous margins impacted by lower LME terminal prices
-
Sims Recycling Solutions continuing to grow impressively and a strong contribution from ARA, the Company’s Australian lead alloying joint venture
5
Financial Overview
| HY08 | HY07 | Change (%) | |
|---|---|---|---|
| Sales Revenue ($m) | 2,727 | 2,623 | 4.0 |
| EBITDA ($m) | 211.3 | 219.2 | (3.6) |
| EBIT ($m) | 172.0 | 182.9 | (6.0) |
| NPAT ($m) | 102.2 | 112.9 | (9.5) |
| EPS (cents) | 81.1 | 90.6 | (10.5) |
| ROCCE (%) (annualised) (post-amortisation) | 19.1 | 22.3 | (14.3) |
| ROE (%) (half year) (post-amortisation) | 7.8 | 9.2 | (15.2) |
| Operating Cash Flow (exc. acquisitions) ($m) | (16.5) | 75.4 | (121.8) |
| Capital Expenditure ($m) | (54.5) | (37.4) | 45.7 |
| Net Debt ($m) | 449.8 | 370.8 | 21.3 |
| Net Debt / (Net Debt + Equity) (%) | 25.6 | 23.3 | 9.9 |
| Sales Tonnes (‘000) (exc. associates) | 4,698.7 | 4,732.7 | (0.7) |
| Interim Dividend (47% franked) (cents per share) | 55.0 | 60.0 | (8.3) |
6
Sales Revenue by Region
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HY 2008 HY 2007
20.1% 19.6%
27.9%
29.7% Australia, NZ & Asia
North America
Europe
50.2% 52.5%
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| $m | HY08 | HY07 | Change (%) |
|---|---|---|---|
| Australia, NZ & Asia | 807.8 | 733.4 | 10.1 |
| North America | 1,370.1 | 1,376.2 | (0.4) |
| Europe | 549.1 | 513.0 | 7.0 |
| Total | 2,727.0 | 2,622.6 | 4.0 |
-
North America revenues up 12.6% on HY07 in USD, but flat after translation into AUD
-
Europe revenues also up 15.6% on HY07 in GBP, but only up 7% after translation into AUD
7
EBIT by Region
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HY 2007
14.4%
Australia, NZ & Asia
40.3%
North America
Europe
45.3%
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HY 2008
16.1%
35.3%
48.6%
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| $m | HY08 | HY07 | Change (%) |
|---|---|---|---|
| Australia, NZ and Asia | 65.2 | 78.9 | (17.4) |
| North America | 89.6 | 87.8 | 2.1 |
| Europe | 29.7 | 27.9 | 6.5 |
| Total | 184.5 | 194.6 | (5.2) |
-
EBIT by region is presented pre-amortisation of other intangibles
-
North America EBIT up 17.0% on HY07 in USD
-
Europe EBIT also up 14.2% on HY07 in GBP
8
EBIT By Product
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HY 2008
21.4%
8.6%
7.2%
16.8% 4.5%
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41.5%
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HY 2007
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12%
Ferrous Trading incl. NFSR
6.2%
Ferrous Brokerage
51.5%
1.6%
Non Ferrous Trading
Non Ferrous Brokerage
(incl.stainless)
Manufacturing / JVs / Sims Steel
24.6%
Recycling Solutions
4.1%
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| $m | HY08 | HY07 | Change (%) |
|---|---|---|---|
| Ferrous Trading (incl. NFSR) | 91.4 | 114.5 | (20.2) |
| Ferrous Brokerage | 9.9 | 9.1 | 8.5 |
| Non Ferrous Trading | 36.9 | 54.6 | (32.4) |
| Non Ferrous Brokerage (incl. stainless) | 15.8 | 3.6 | 344.8 |
| Manufacturing / JVs / Sims Steel | 18.9 | 13.7 | 38.0 |
| Recycling Solutions | 47.2 | 26.8 | 76.3 |
| Corporate Costs | (35.7) | (27.7) | 28.9 |
| Amortisation of Other Intangibles | (12.4) | (11.7) | 6.7 |
| Total | 172.0 | 182.9 | (6.0) |
-
EBIT by product is presented pre-corporate costs and amortisation of other intangibles
-
Ocean freight rates and buy competition impacted the ferrous result
-
Non ferrous impacted by decline in LME prices
-
Very strong contribution from SRS and ARA joint venture
-
Corporate costs increased due to foreign exchange cost allocations and movements, and additional accounting expenses of the Company's long term incentive plan
9
EBIT Change by Region
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200
-14 +2 +2 -1
150
183
172
100
50
HY07 EBIT Australia, NZ & Europe (incl. UK) North America Intangibles HY08 EBIT
Asia
$ million
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-
Australia, NZ & Asia ($14m)
-
� Europe (incl. UK) $2m � North America $2m � Intangibles ($1m)
10
EBIT Change by Product
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200
+20 +5
-8 -1
150
-22 -5
183
100 172
50
� Ferrous (incl. NFSR) ($22m)
� Non Ferrous ($5m)
� Recycling Solutions $20m
� Manufacturing/JVs/Sims Steel $5m
� Group and Regional Corporate Costs ($8m)
� Intangibles ($1m)
IH07 EBIT Ferrous (incl. NSFR)Non Ferrous Recycling SolutionsManuf./JVs/Sims SteelCorporate Costs Intangibles IH08 EBIT
$ million
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11
Intake Volumes
| HY 2008 23.0% 40.8% 4.2% 1.2% HY 2007 28.8% 24.3% 41.8% 1.0% 4.1% 4,729.1 48.6 192.5 1,359.9 1,149.3 1,978.8 HY07 (3.3) 10.5 (1.4) 3.7 (8.7) (5.6) Change (%) 4,570.7 Total 53.7 Other 189.9 Non Ferrous Trading / Brokerage 1,410.5 Ferrous Brokerage 1,049.3 Other Processed Ferrous 1,867.3 Ferrous Shredded (incl. NFSR) HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
HY 2008 23.0% 40.8% 4.2% 1.2% HY 2007 28.8% 24.3% 41.8% 1.0% 4.1% 4,729.1 48.6 192.5 1,359.9 1,149.3 1,978.8 HY07 (3.3) 10.5 (1.4) 3.7 (8.7) (5.6) Change (%) 4,570.7 Total 53.7 Other 189.9 Non Ferrous Trading / Brokerage 1,410.5 Ferrous Brokerage 1,049.3 Other Processed Ferrous 1,867.3 Ferrous Shredded (incl. NFSR) HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
HY 2008 23.0% 40.8% 4.2% 1.2% HY 2007 28.8% 24.3% 41.8% 1.0% 4.1% 4,729.1 48.6 192.5 1,359.9 1,149.3 1,978.8 HY07 (3.3) 10.5 (1.4) 3.7 (8.7) (5.6) Change (%) 4,570.7 Total 53.7 Other 189.9 Non Ferrous Trading / Brokerage 1,410.5 Ferrous Brokerage 1,049.3 Other Processed Ferrous 1,867.3 Ferrous Shredded (incl. NFSR) HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
HY 2008 23.0% 40.8% 4.2% 1.2% HY 2007 28.8% 24.3% 41.8% 1.0% 4.1% 4,729.1 48.6 192.5 1,359.9 1,149.3 1,978.8 HY07 (3.3) 10.5 (1.4) 3.7 (8.7) (5.6) Change (%) 4,570.7 Total 53.7 Other 189.9 Non Ferrous Trading / Brokerage 1,410.5 Ferrous Brokerage 1,049.3 Other Processed Ferrous 1,867.3 Ferrous Shredded (incl. NFSR) HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
HY 2008 23.0% 40.8% 4.2% 1.2% HY 2007 28.8% 24.3% 41.8% 1.0% 4.1% 4,729.1 48.6 192.5 1,359.9 1,149.3 1,978.8 HY07 (3.3) 10.5 (1.4) 3.7 (8.7) (5.6) Change (%) 4,570.7 Total 53.7 Other 189.9 Non Ferrous Trading / Brokerage 1,410.5 Ferrous Brokerage 1,049.3 Other Processed Ferrous 1,867.3 Ferrous Shredded (incl. NFSR) HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
|---|---|---|---|---|
| Total Tonnes (‘000) | HY08 | HY07 | Change (%) | |
| Ferrous Shredded (incl. NFSR) | 1,867.3 | 1,978.8 | 56 | |
| (.) | ||||
| Other Processed Ferrous | 1,049.3 | 1,149.3 | (8.7) | |
| Ferrous Brokerage | 1,410.5 | 1,359.9 | 3.7 | |
| Non Ferrous Trading / Brokerage | 189.9 | 192.5 | (1.4) | |
| Other | 53.7 | 48.6 | 10.5 | |
| Total* | 4,570.7 | 4,729.1 | (3.3) |
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1.2%
4.2%
40.8%
30.8%
23.0%
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* Excluding the effect of re-allocating tonnage from Sims’ US West business to SA Recycling, the reduction in Intake Volumes from H107 would have been 1%.
12
Sales Volumes
HY 2008
HY 2007
| 20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
20.7% 42.3% 30.7% 2.5% 3.8% 28.6% 18.7% 46.2% 4.5% 2.0% 4,732.7 104.1 194.1 1,338.2 1,124.8 1,971.5 HY07 (0.7) 8.8 (7.3) 7.9 (13.5) 0.9 Change (%) 4,698.7 Total 113.3 Other 180.0 Non Ferrous Trading / Brokerage 1,444.4 Ferrous Brokerage 972.7 Other Processed Ferrous 1,988.3 Ferrous Shredded incl. NFSR HY08 Total Tonnes (‘*000) Ferrous Shredded incl. NFSR Other Processed Ferrous Ferrous Brokerage Non Ferrous Trading / Brokerage Other |
|---|---|---|---|---|---|
| Total Tonnes (‘000) | HY08 | HY07 | Ch % | ||
| ange () | |||||
| Ferrous Shredded incl. NFSR | 1,988.3 | 1,971.5 | 0.9 | ||
| Other Processed Ferrous | 972.7 | 1,124.8 | (13.5) | ||
| Ferrous Brokerage | 1,444.4 | 1,338.2 | 7.9 | ||
| Non Ferrous Trading / Brokerage | 180.0 | 194.1 | (7.3) | ||
| Other | 113.3 | 104.1 | 8.8 | ||
| Total* | 4,698.7 | 4,732.7 | (0.7) |
* Excluding the effect of re-allocating sales tonnages from Sims’ US West business to SA Recycling, Sales Volumes would have increased by 0.6% on 1H07.
13
Sales by Destination
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HY 2008
15.2%
27.5%
14.7%
3.4%
2.6%
12.2%
24.4%
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EUROPE NE ASIA CHINA & HK SE ASIA & OCEANIA MIDDLE EAST USA/CANADA DOMESTIC SALES [*]
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HY 2007
18.0%
29.9%
10.5%
5.2%
3.3% 15.2%
17.9%
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-
Ferrous exports increasing, particularly into the Mediterranean and South-East Asia
-
Chinese ferrous imports remain low, but offset by strong demand for non ferrous
* Domestic refers to sales in country of sourcing
14
Sims Recycling Solutions
-
Continues to grow impressively and contribute strongly to Group revenue and profits
-
SRS EBIT (pre-corporate costs and amortisation of other intangibles) of $47.2 million up significantly by 76.3% on HY07 and by 17.4% on the second half of FY07
-
SRS HY08 result represented 21.4% of Group EBIT (pre-corporate costs and amortisation of other intangibles) meeting the Company’s target of 20% - 25% of Group EBIT for the division
� Strategy
-
Expansion of e-recycling business to “lifecycle solutions provider” with acquisitions of RecommIT (UK) and Accu-Shred (Canada) in 3Q08
-
B2B opportunities grow as B2C margins narrow
-
NYC Recycling Contract nearing finalisation
-
Initial investment in Indian e-recycling market in 2Q08
15
building the world’s leading recycling company . . .
Financial Results Ross Cunningham
Group Income Statement
| $m | HY08 | HY07 | Change | Change (%) |
|---|---|---|---|---|
| Sales Revenue | 2,727 | 2,623 | 104 | 4.0 |
| EBITDA | 211.3 | 219.2 | (7.9) | (3.6) |
| EBIT | 172.0 | 182.9 | (10.9) | (6.0) |
| Net Interest Expense | (16.4) | (12.7) | (3.7) | 29.1 |
| Tax Expense | (53.3) | (57.4) | 4.1 | (7.1) |
| Net Profit After Tax | 102.2 | 112.9 | (10.7) | (9.5) |
17
Group Balance Sheet
| $m | HY08 | HY07 | Change | Change (%) |
|---|---|---|---|---|
| Current Assets | 863.2 | 720.5 | 142.7 | 19.8 |
| Non-current Assets | 1,369.5 | 1,277.3 | 92.2 | 7.2 |
| Total Assets | 2,232.7 | 1,997.8 | 234.9 | 11.8 |
| Current Liabilities | 341.3 | 279.1 | 62.2 | 22.3 |
| Non-current Borrowings | 492.0 | 400.3 | 91.7 | 22.9 |
| Other Non-current Liabilities | 92.9 | 95.2 | (2.3) | (2.4) |
| Total Liabilities | 926.2 | 774.6 | 151.6 | 19.6 |
| Net Assets / Equity | 1,306.5 | 1,223.2 | 83.3 | 6.8 |
| Net Debt / (Net Debt +Equity) (%) | 25.6 | 23.3 | 2.3 | 9.9 |
18
Group Cash Flow
| $’000 | HY08 | HY07 | Change | Change (%) |
|---|---|---|---|---|
| Earnings Before Interest & Tax | 172.0 | 182.9 | (10.9) | (6.0) |
| Non Cash Items | ||||
| Depreciation & Amortisation | 39.3 | 36.3 | 3.0 | 8.3 |
| Provisions | (4.3) | 2.1 | (6.4) | (304.8) |
| Net Profit on Disposal of Assets | (2.5) | (0.5) | (2.0) | 400.0 |
| Net Business Purchases | (29.8) | (69.2) | 39.4 | (56.9) |
| Payments for Property, Plant & Equipment | (54.5) | (37.4) | (17.1) | 45.7 |
| Proceeds from Sale of Property, Plant & Equipment | 9.8 | 1.4 | 8.4 | 600.0 |
| Net Working Capital Change | (138.6) | (59.3) | (79.3) | 133.7 |
| Income Tax Paid | (65.9) | (73.4) | 7.5 | (10.2) |
| Net Interest Expense | (16.4) | (12.7) | (3.7) | 29.1 |
| Cash Outflows from Operations & Investing Activities | (90.9) | (29.8) | (61.1) | 205.0 |
19
Australia, NZ & Asia Regional Results
| HY08 | HY07 | Change (%) | |
|---|---|---|---|
| Sales Revenue ($m) | 807.8 | 733.4 | 10.1 |
| EBITDA ($m) | 73.6 | 85.0 | (13.4) |
| EBIT ($m) (post-corporate costs and pre-amortisation) | 65.2 | 78.9 | (17.4) |
| Assets ($m) | 522.4 | 433.7 | 20.5 |
| Employees | 1,439 | 1,204 | 19.5 |
| Sales Margin (%) | 19.2 | 21.2 | (9.4) |
| ROCCE (%) (post-corporate costs and amortisation) | 17.2 | 25.2 | (31.7) |
20
North America Regional Results
| HY08 | HY07 | Change (%) | |
|---|---|---|---|
| Sales Revenue ($m) | 1370.1 | 1376.2 | (0.4) |
| EBITDA ($m) | 98.6 | 97.2 | 1.4 |
| EBIT ($m) (post-corporate costs and pre-amortisation) | 89.6 | 87.8 | 2.1 |
| Assets ($m) | 1,121.9 | 1,046.9 | 7.2 |
| Employees | 1,629 | 1,322 | 23.2 |
| Sales margin (%) | 17.3 | 17.3 | - |
| ROCCE (%) (post-corporate costs and amortisation) | 7.6 | 7.7 | 1.3 |
21
Europe Regional Results
| HY08 | HY07 | Change (%) | |
|---|---|---|---|
| Sales Revenue ($m) | 549.1 | 513.0 | 7.0 |
| EBITDA ($m) | 39.1 | 36.1 | 8.3 |
| EBIT ($m) (post-corporate costs and pre-amortisation) | 29.7 | 27.9 | 6.5 |
| Assets ($m) | 588.3 | 517.2 | 13.7 |
| Employees | 1,226 | 972 | 26.1 |
| Sales margin (%) | 28.0 | 29.0 | (3.4) |
| ROCCE (%) (post-corporate costs and amortisation) | 7.2 | 8.6 | (16.3) |
22
building the world’s leading recycling company . . .
Metal Management Merger Update Jeremy Sutcliffe
Metal Management Merger Update
-
F-4 Registration Statement cleared by SEC and mailed to Metal Management stockholders, with Metal Management stockholder meeting to be held on 14 March 2008
-
If merger is approved by Metal Management stockholders, it is expected that the merger will be completed by 17 March 2008
-
All other conditions to the merger have been satisfied or are procedural in nature and expected to be satisfied to allow for completion as scheduled
-
Integration planning is well underway and both management teams remain confident that US$35 million in synergies remains achievable
-
Metal Management stockholders who become Sims ADS holders in the ordinary course of business will be entitled to participate in the Sims interim dividend to be paid on 9 April 2008
24
Metal Management Exchange Ratio Update
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65
60
55
50
45
40
Sep 07 Oct 07 Nov 07 Dec 07 Jan 08
Metal Management price Implied offer value
U S $
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25
building the world’s leading recycling company . . .
Markets & Outlook Jeremy Sutcliffe
Ferrous Scrap Prices & Freight
-
Unprecedented rise in ferrous price to record highs
-
Subsequent easing of freights from record highs, although likely to be short term in duration
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500
460
420
380
340
300
Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
HMS No. 1 C&F Korea ferrous scrap price
U S $ /t
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- Likely iron ore settlement an indicator of robust ferrous raw material demand
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200
150
100
50
0
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08
Bulk to Korea
Freight rates (indexed to 100)
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27
Non Ferrous Prices
-
Deterioration in non ferrous prices, particularly in 2Q08
-
LME Aluminium price hit a low of US$2,375 per tonne on 18 September 2007 from a high of US$2,791 per tonne on 20 July 2007
-
LME Copper price hit a low of US$6,335 per tonne on 18 December 2007 from a high of US$8,229 per tonne on 3 October 2007
� Prices have since rebounded, with Aluminium at US$2,812.50 per tonne and Copper at US$8,101.00 per tonne on 21 February 2007
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2,900
2,800
2,700
2,600
2,500
2,400
2,300
2,200
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08
LME Aluminium Price
US$/t
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8,500
8,000
7,500
7,000
6,500
6,000
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08
LME Copper Price
US$/t
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28
Exchange Rates
-
During HY08, the average Australian/US exchange rate was 87 cents (compared to 77 cents for the first half in the 2007 financial year)
-
Half on half, currency movements had a negative $13 million EBIT impact on translation of overseas earnings
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0.95
0.90
0.85
0.80
0.75
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08
AUD/USD
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0.48
0.46
0.44
0.42
0.40
0.38
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08
AUD/GBP
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Outlook
-
The rapid escalation of US dollar C&F ferrous prices began in midDecember 2007. Although, in large part, this occurred too late to positively impact January sales, ferrous margins will expand significantly as 3Q08 progresses. Higher non ferrous prices will also positively impact earnings
-
The outlook for 3Q08 is robust with earnings to exceed those in each of 1Q08 and 2Q08. The full extent of the improvement will not, however, be accurately known until the outcome of our buy price strategies becomes clearer
-
To date, the impact of a slowing US economy has not been felt with demand and prices still strong for ferrous material within the North American market
-
Encouragingly, ferrous export sales are already being made for 4Q08 above US$500 per tonne C&F Asia. This provides further optimism for the Company’s overall 2H08 performance which should also benefit from at least three months’ contribution from Metal Management
30
Share Price from July 2007
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34
32
30
28
26
24
22
20
Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08
Sims Group S&P/ASX 200 All Ordinaries S&P/ASX 200 Industrials
Price (rebased to Sims Group)
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