So what is a reporting period without a profit warning of some degree from Sims Metal Management?
There seems to have been one or two in the past year or so (a bit like insurer, QBE) from Sims, which given its global trading operation and exposure to currencies and factors beyond its control (such as changes in scrap policy in China) and yesterday was no different.
The warning saw investors take fright and mark the shares down 16.07% to $9.19.
That was after Sims’ management cared the market to expect underlying earnings to be about $110 million, compared to $125 million in the first half of the previous financial year.
Chief executive Alistair Field said in the statement to the ASX the period had been challenging for all recycling companies “and will continue to be so for the near future”.
“We are meeting these challenges and will maintain our focus on capitalising on our strengths and on improving underperforming businesses. I am confident that our strategy of producing high-quality products that better meet the needs of our customers is key to our long term success,” he said.
The biggest decline was an 88% slump in earnings from Europe metals, down to $1.4 million from $11.6 million the previous year.
Sims said challenges in the Turkish economy and requirements for higher quality ferrous scrap created headwinds.
Earnings from the SA Recycling division dropped 33% from $25.1 million to $16.8 million.
The Company says it will release its December half-year results on February 20.
