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Sims chief retires as firm reports further losses

Sims’ chief executive is to step down as the metal and electronics recycler reported a first half loss of AUS$295.5m.

Daniel W Dienst, executive director and group chief executive officer of Sims, will retire in June. He said he was confident the firm’s best days are ahead despite falling intakes and shipments.

The reported losses were an improvement on the AUS$633.2m H1 loss the previous year.

The Australian-US giant reported H1 revenue down 25% on the corresponding period last year to AUS$3.4bn.

Underlying EBITDA was down 33% at AUS$94m.

Total scrap intake for the period to six months to 31 December was 6 million tonnes, and shipments 5.9 million tonnes, down 18% and 17% respectively, falling mostly in North America.

Last week the firm reported an inventory write-down adjustment in the UK of around AUS$78m linked to possible fraud, with AUS$17m impacting the H1 2013 results.  

Dienst said the company remained intensely focused on controlling operating costs and optimising its asset portfolio.

Key underlying results (in AUS$ million):  
Revenue$3,429$4,584
EBITDA$94$140
EBIT$31$76
NPAT$10$42
Diluted earnings per share (cents)4.820.0

 

European losses

In Europe sales revenue fell 10% to AUS$812m.  Underlying EBIT was around AUS$12m. Scrap intakes and shipments were down 4% and 2% respectively at 0.8 million tonnes.

Daniel Dienst

Dienst (left) said: “The performance of our European business in the first half of Fiscal 2013 was an obvious disappointment. Our traditional UK Metals operations in particular continue to struggle with weak scrap generation and tight margins masking a reduction in underlying controllable costs of AUS$0.8m per month in the UK Metals business and solid earnings contribution from SRS in Continental Europe.

“As we move through the second half of Fiscal 2013 our efforts to reduce costs and tighten controls will intensify. We anticipate reaching a controllable cost savings run rate of AUS$1.5m per month during the second half of Fiscal 2013, while rigorously examining further cost savings opportunities in both the metals and SRS businesses there.”

He added: “While an investigation into the UK inventory matter has revealed that the conditions which allowed this activity to occur were unique to the two facilities in the UK, and principally a function of our SRS business outgrowing its control environment, the board and management continue to view the full resolution of the matter as its highest priority. We are working diligently to ensure this issue will never be replicated.”

Transition period

Dienst said now was the right time for him step down as group CEO after nine years in the position.

Chairman Geoff Brunsdon said the board would like to acknowledge Dienst’s “enormous contributions” to the company.

He added: “During this transition period, the chief executive officer will continue to be responsible for execution of key elements of the company’s strategy; namely to continue to consolidate our position in markets where we have a number one or two position, reduce our overall operating costs and exit those business where we do not have a sustainable competitive advantage. Mr Dienst will also be responsible for implementation of the initiatives the Company needs to take in our UK SRS business.”

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