Scrap metal merchant Sims Ltd has beaten market expectations with soaring results that included a 74% surge in December half revenue to $4.265 billion and a near quadrupling in net profit to $253.2 million.
In fact net profit was more than $200 million higher than the net figure for the December, 2020 half alone.
That saw Sims more than triple its dividend from 12 cents a share for the December 2020 half to 41 cents a share.
And the shares surged more than 17% in a very positive reaction after Sims also revealed it would further reward shareholders with a $54 million buyback.
That will take the total distribution to shareholders to $135 million with the $81 million interim.
The shares ended the day at $17.04 up 13.6% after being as high as $17.76.
Sims said in the release the vastly improved performance was off the back of both higher sales volumes and higher prices with its trading margin improving by 45%
“We delivered an excellent performance in first half of 2021-22 with earnings above guidance, driven by growth in trading margin, against a backdrop of volatile freight markets and inflationary pressures,” Sims CEO Alistair Field told the market.
Sims says intake volumes grew strongly and were close to pre-COVID levels.
“In first half 2021-22 we maintained growth momentum in the core metal business, continued to build adjacent business to further enhance our earnings quality, and strengthened our strategic position across our portfolio of businesses.”
Management said in the release that the company continues to see strong business performance in the second half to date.
“Intake volumes are solid, as non-ferrous commodity prices track higher than the first half 2021-22 averages and ferrous prices remain elevated, albeit volatile. The demand for ferrous and non-ferrous products remains robust.”
The company says it is closely managing the impacts of freight cost volatility.
“Additionally, we are actively seeking medium-term efficiency gains to offset inflation pressures.”
