Sims Metal blames US slump for slow recovery

By Greg Roberts,
Feb19,2011 12:00AM

THE world's largest scrap metal recycler, Sims Metal Management, says it is struggling with a sluggish economic recovery in North America and scarcity of scrap despite an increase in overall first half profit.

The company increased first half net profit 23.6 per cent to $49.3 million on

16.6 per cent higher revenues to $3.9 billion and expects a strong ferrous (iron) market-led recovery. Sims shares gained 39c, or 2.06 per cent, to close at $19.34 yesterday.

In North America, earnings before interest and tax (EBIT) fell 5 per cent to $26.6 million, compared to a 57 per cent jump in Australasia to $19.3 million and 67 per cent lift in Europe to $36.4 million.

Clawing back just one million of a lost three million tonnes of scrap metal would "conservatively" improve North American EBIT by $30 million, chief financial officer Rob Larry said.

Scrap intake in North America in the period was 5.1 million tonnes, an increase of 1 per cent on the previous year.

However, that figure was 23 per cent below pre-global financial crisis scrap metal volumes in North America pressuring margins, the Australian company said.

Chief executive Daniel Dienst said he was "disappointed" with margin pressures in North America.

Sims Metal declared an interim dividend of 12c a share, 42 per cent franked 50 per cent of net profit. ((sourced from Herald Sun)