European Metal Recycling (EMR) has reported a 21% rise in pre-tax profit despite falling revenue, its latest accounts show.
Figures just published by Companies House show the Warrington-headquartered business recorded a pre-tax profit of £57m for the year to 31 December 2014, up from £47m for 2013.
The rise came despite a 9% drop in turnover from £2.81bn to £2.55bn over the same period.
In the company’s annual report, group chief executive Christopher Sheppard said the turnover reduction was “largely due to reduced metal prices”.
Sheppard’s strategic report for the year said that steel markets had been “characterised by ongoing, relatively lacklustre demand”, and that structural overcapacity continued to be a global issue for the industry in the face of a relatively weak economy.
“This was compounded during the year by oversupply of raw materials such as iron ore and, as a consequence, prices declined in 2014 by more than 30%,” he said.
“Weakness in the Turkish economy, the world’s largest importer of recycled steel and an important market for EMR, and the relative strength of the US economy led to a 20% depreciation in the lira against the dollar. The resulting reduced competitiveness of Turkish versus Chinese steel translated through into reduced demand for raw materials.
“Additionally, the effect of international sanctions against Russia had a dramatic effect on the rouble, which plunged more than 30% against the US dollar. The effect of this was twofold: increased competitiveness from exported Russian steel and significant substitution of scrap metal with cheap Russian secondary products, billet and slab. The net result of this was a sharp fourth-quarter decline in pricing for recycled steel of over 20%.”
The company said a notable investment in the UK was a state-of-the-art shredder residue plant that came online at its Oldbury, West Midlands, site in late 2013. The facility separates residue from durable consumer goods, such as vehicles and white goods, into metals, plastics, clean aggregates and non-recyclables.
Non-recyclables are ultimately destined to be processed into Syngas for generating renewable electricity at a co-located facility that is due to be operational at the end of this year.
Plastics from the shredder residue plant are further refined by EMR’s joint venture MBA Polymers.
The firm added that it had completed significant investment at its US ship recycling facility in Brownsville, Texas, which had been awarded contracts to dismantle two US Navy aircraft carriers.