Sims reports lower profit figure for its fiscal year

Global metals and electronics recycling company Sims Ltd. has reports 2024 fiscal year revenue that is up 6.2 percent compared with its previous fiscal year. However, the Australia-based company, with sizable operations in North America, reports an underlying earnings before interest and taxes (EBIT) figure down 83 percent year on year.

During the Sims 2024 fiscal year, which ran from July 1, 2023, to June 30, 2024, although its revenue increased, sales volume was down 1.7 percent in what it calls “a challenging market.”

The company credits its revenue growth in the face of that market as “reflecting acquisition, volume and nonferrous price gains.” In presentation slides summarizing its 2024 fiscal year, Sims shows its metal trading margin rose by 2.4 percent compared with the previous fiscal year.

Nonetheless, the company’s fiscal 2024 EBIT of about $29 million is down by 83 percent from $170 million in the prior year. Sims credits part of the profit it retained to a stronger contribution from its Sims Lifecycle Services (SLS) electronics recycling and information technology asset disposition (ITAD) business unit.

In its investor presentation, Sims characterizes the ferrous scrap market as short of supply. The company points to “resilient” demand in the U.S. steel sector but portrays a “challenging seaborne market primarily driven by weak global steel production” elsewhere.

The company considers SLS and metals recycling operations in Australia and North America—including its stake in SA Recycling—as its “core operations” and “redefined strategic priorities.”

Earlier this month, Sims announced the sale of its United Kingdom scrap facilities to London-based Unimetals Group Ltd. While the company divested those assets, it says it is executing on acquisitions in the form of its purchases earlier this decade of Baltimore Scrap, Philadelphia-based Northeast Metal Traders, Maryland-based Atlantic Recycling Group and Alumisource of Pennsylvania.

In a summary of its North American operations, the recycling firm operated its auto shredding plants in the first half of this year at 68.5 percent of their capacity, an increase from the 66.5 percent rate averaged in late 2023.

For the entire fiscal year, Sims shipped 8 percent less ferrous scrap via ocean-going bulk vessels. The company says it has “upgraded infrastructure for container deployment as market conditions dictate” to take advantage of price differences between the domestic and export markets.

Sims' SLS business unit experienced a 41.9 percent compound annual growth rate (CAGR) in obsolete electronic items handled from fiscal year 2021 to fiscal year 2024.

The company says SLS has “expanded [its] circular center footprint in the Netherlands and Singapore for enhancing services” as a way of “increasing capacity in strategic locations.”

In the outlook portion of its presentation, Sims CEO Steven Mikkelsen says in the nonferrous market they are optimistic about the sustained strength in zorba prices driven by energy transition and decarbonization.

In the ferrous sector, Sims predicts “global steel demand is expected to remain muted, with economic indicators showing little improvement and Chinese steel exports continuing to affect the market.

Longer term, however, Sims says, “Global decarbonization of steelmaking, growth of electric arc furnaces and the energy transition will drive demand for recycled metal.”