Metals recycling giant Sims Metal Management has reported doubling pretax profits in the six months to December, but says market conditions remain challenging given a decline in scrap prices.
Earnings for the Australian company soared to Aus$91.3m (£46m) despite revenue declining 5.7% year-on-year to Aus$3.6bn.
Sims said the positive performance was the result of restructuring and streamline initiatives, especially in its European unit and its recycling operations across the world.
In June, the company started offloading a “substantial portion” of its Sims Recycling Solution business in the UK and all operations in Canada because legislation and market dynamics meant they were “commercially unattractive”.
The main region of growth in the first half of the 2015 financial year was North America, where Sims reported a strong increase in underlying pretax profit.
The Europe Metals and Global E-Recycling units also delivered higher earnings, driven by gains from restructuring actions, lower operating costs and reduced sales and admin costs.
However, group chief executive Claro Galdino was wary about performance in the second half of the financial year.
“As pleased as we are with our first-half results, market and industry conditions remain difficult. The steep drop in iron ore prices has challenged the competitiveness of our electric arc furnace steel mill customers. As a consequence, ferrous scrap demand and prices have fallen sharply since the start of January.”
He added that the decline in prices will have a negative impact on supply.
“While we believe the benefits from our strategic initiatives in the second half of 2015 should assist in mitigating near-term commodity market headwinds, we remain prudently conservative in our outlook.”