Sims Ltd. · ASX:SGM
Sims — Merrill Lynch Australia Investment Conference (September 2007)
35 slides from Sims's conference presentation, Sep 11, 2007
Slide 1: Merrill Lynch Australia Investment Conference
For personal use only Merrill Lynch Australia Investment Conference building the world’s leading recycling company . . . Sims Group Limited ASX Code: SGM Jeremy Sutcliffe, CEO 11 September 2007
Slide 2: Disclaimer
Disclaimer For personal use only This presentation for Sims Group Limited is designed to provide a high level overview of aspects of the operations of Sims Group Limited. The material set out in the presentation is current as at 11 September 2007. The presentation may contain forward looking stateme
Slide 3: Agenda
Agenda For personal use only 1. Company Profile 2. FY07 Financial Results 3. Strategy, Outlook & Markets 4. Questions 3
Slide 4: Company Profile
For personal use only building the world’s leading recycling company . . . Company Profile
Slide 5: Sims Group
Sims Group For personal use only World’s leading metals recycler with No. 1 or No. 2 market positions in Australia, New Zealand, United Kingdom, US West Coast and US East Coast World’s largest electronics recycler with No. 1 market positions in the United Kingdom, Continental Europe, North Ameri
Slide 6: Current Global Footprint
Current Global Footprint For personal use only Illinois Ontario 2 operations 1 operation EU 40 operations British New York/ Columbia New Jersey/ Connecticut Asia 5 operations 7 operations 5 Representative Offices Nth California 7 operations Virginia 7 operations Sth California 26 operations JV Arkan
Slide 7: Year on Year Highlights
Year on Year Highlights For personal use only Sales revenue of $5.5 billion (up 48% on FY06) Net profit after tax of $254.4 million (up 29% on FY06) Earnings per share of 203.6 cents (up 17% on FY06) 166 physical operations globally (up from 122 at end FY06) Mitsui becomes a substantial co
Slide 8: FY07 Growth Initiatives
FY07 Growth Initiatives For personal use only Completion of operational and management integration of former Hugo Neu business in North America Completion of the Adams joint venture in Southern California (on 1 September 2007) – The newly created joint venture company, SA Recycling LLC, will ope
Slide 9: International Expansion Timeline
International Expansion Timeline For personal use only Major US acquisitions May-04 Jun-04 Bay Bridge Enterprises Chaparral shredder, LLC, (Virginia) (Virginia) Mar 07 Sept 07 Dec-96 URI Noranda Recycling Adams Steel JV Richmond Steel Recycling (Canada) (USA) (Sth Cal) Oct-97 (50%) Peck Mar-00 Jan-8
Slide 10: Share Price 2002 - 2007
SHARE PRICE 2002 - 2007 For personal use only 30.00 25.00 A$ (rebased to Sim s price) 20.00 15.00 10.00 5.00 0.00 2002 2003 2004 2005 2006 2007 Sims S&P/ASX 200 All Ordinaries S&P/ASX 200 Industrials 10
Slide 11: FY07 Financial Results
For personal use only building the world’s leading recycling company . . . FY07 Financial Results
Slide 12: Financial Overview
Financial Overview For personal use only FY07 FY06 Change (%) Sales Revenue ($m) 5,548.5 3,752.4 48% EBITDA ($m) 459.4 343.4 34% EBIT ($m) 407.8 301.9 35% NPAT ($m) 254.4 196.6 29% EPS (cents) 203.6 174.2 17% DPS (cents) 120 105 14% ROCCE (%) 24.4 26.2 (7%) ROE (%) 19.2 16.4 17% Operating Cash Flow
Slide 13: Sales Revenue by Product
Sales Revenue by Product For personal use only 2007 2006 8% 7% 5% Ferrous Trading 7% Non Ferrous Shred Recovery 7% 4% Ferrous Brokerage 42% Non Ferrous Trading 47% 17% 16% Non Ferrous Brokerage (incl. stainless) Manufacturing / JVs / SimsSteel Recycling Solutions 13% 5% 18% 4% $m FY07 FY06 Change (%
Slide 14: Sales Revenue by Region
Sales Revenue by Region 2007 2006 For personal use only 21% 21% 26% Australia & New Zealand 33% North America UK & Europe 53% 46% $m FY07 FY06 Change (%) Australia & NZ 1,465.4 1,224.7 20% North America 2,938.2 1,735.2 69% Europe 1,144.9 792.5 44% Total 5,548.5 3,752.4 48% 14
Slide 15: Sales by Destination
Sales by Destination For personal use only 2006 2007 12% 19% 29% 33% 12% 13% 5% 4% 21% 4% 2% 13% 16% 17% EUROPE NE ASIA CHINA & HK SE ASIA & OCEANIA MIDDLE EAST USA/CANADA DOMESTIC SALES* * Domestic refers to sales in country of sourcing 15
Slide 16: EBIT By Product
EBIT By Product For personal use only 2007 14% Ferrous Trading incl. NFSR 2006 11% Ferrous Brokerage 5% 8% Non Ferrous Trading 1% 4% 52% Non Ferrous Brokerage (incl.stainless) 56% Manufacturing / JVs / 21% 21% SimsSteel Recycling Solutions 4% 3% $m FY07 FY06 Change (%) Ferrous Trading incl. NFSR 245
Slide 17: EBIT by Region
EBIT by Region For personal use only 2007 2006 17% 18% 38% 41% Australia & New Zealand North America UK & Europe 41% 45% $m FY07 FY06 Change (%) Australia & NZ 153.6 124.8 23% North America 184.1 123.4 49% Europe 70.1 53.7 31% Total 407.8 301.9 35% 17
Slide 18: EBIT Growth by Region
EBIT Growth by Region For personal use only 450 400 +61 350 $ million +16 +29 300 408 250 302 200 2006 EBIT Australia & NZ UK & Europe North America 2007 EBIT Australia & NZ +$29m (+24%) Europe +$16m (+31%) North America +$60m (+48%) 18
Slide 19: EBIT Growth by Product
EBIT Growth by Product For personal use only 450 1 +30 -22 400 +38 350 $ million +60 300 408 250 302 200 2006 EBIT Fe rrous (incl. Non Fe rrous Re cycling M anuf./JVs /Sim s Corporate Cos ts 2007 EBIT NSFR) Solutions Ste e l Ferrous (incl. NFSR) Manufacturing/JVs/SimsSteel +$60m (+29%) -$1m (-3%
Slide 20: Sales Volumes
Sales Volumes For personal use only FY07 FY06 2% 2% 4% Ferrous Shredded incl. 4% NFSR Other Processed Ferrous 19% 27% 38% Ferrous Brokerage 46% Non Ferrous Trading / Brokerage Other 29% 29% Total Tonnes (‘000) FY07 FY06 Change (%) Ferrous Shredded incl. NFSR 3,646 3,560 2% Other Processed Ferrous 2,
Slide 21: Sims Recycling Solutions
Sims Recycling Solutions For personal use only Strong and growing contribution to Group revenue and profits EBIT of $66.9 million up 82% on FY06 – EBIT in 4Q07 represented 16.1% of EBIT Sims Recycling Solutions Group EBIT (net of corporate costs) $ Sales revenue of $450.2 million up 79% on FY0
Slide 22: Sustainability – Energy
Sustainability – Energy For personal use only Inputs Sims’ ferrous scrap used by steel manufacturers (as opposed to virgin materials), in F07 alone, generated • embedded energy savings of 105 petajoules - enough to power almost 40% of Australian homes for one year • reduced CO2 emissions in the
Slide 23: Sustainability - Carbon Footprint
Sustainability - Carbon Footprint For personal use only Sims’ total CO2 footprint for F07 was 219,744 tonnes of CO2 equivalent, which is slightly less than that reported for FY06 Sims - Regional CO2 Emissions Equivalent (Scope1+2) Emission calculations include direct Europe, 32,995 tonnes, GHG e
Slide 24: Group Balance Sheet
Group Balance Sheet For personal use only $m FY07 FY06 Change Change (%) Current Assets 792.8 711.6 81.2 11% Non-current Assets 1,393.6 1,226.2 167.4 14% Total Assets 2,186.4 1,937.8 248.6 13% Current Liabilities 439.6 386.2 53.3 14% Non-current Borrowings 341.3 301.5 39.9 13% Other Non-current Liab
Slide 25: Group Cash Flow
Group Cash Flow For personal use only FY07 FY06 Change Change $m (%) Earnings Before Interest & Tax 407.8 301.9 105.9 35% Non Cash Items Depreciation & amortisation 51.6 41.5 10.1 24% Provisions (16.4) (10.6) (5.8) 55% Net Business (Purchases) / Sales (158.9) (28.5) (130.4) 458% Net Capital Expendit
Slide 26: Australia & NZ Regional Results
Australia & NZ Regional Results For personal use only FY07 FY06 Change (%) Sales Revenue ($m) 1,465.4 1,224.7 20% EBITDA ($m) 167.7 138.7 21% EBIT ($m) 153.6 124.8 23% Assets ($m) 514.8 402.5 28% Employees 1,216 1,197 2% ROCCE (%) 47.8% 42.5% 13% 26
Slide 27: European Regional Results
European Regional Results For personal use only FY07 FY06 Change (%) Sales Revenue ($m) 1,144.9 792.5 44% EBITDA ($m) 87.3 66.9 30% EBIT ($m) 70.1 53.7 31% Assets ($m) 515.2 408.5 26% Employees 1,024 950 8% ROCCE (%) 21.2% 23.0% (8%) 27
Slide 28: North American Regional Results
North American Regional Results For personal use only FY07 FY06 Change (%) Sales Revenue ($m) 2,938.2 1,735.2 69% EBITDA ($m) 204.3 138.2 48% EBIT ($m) 184.1 123.4 49% Assets ($m) 1,156.4 1,126.9 3% Employees 1,470 1,282 15% ROCCE (%) 18.0% 19.6% (8%) 28
Slide 29: Financial Performance Trends
Financial Performance Trends For personal use only EPS DPS A cents A cents 250 180 160 200 140 216.3 160.0¢ 203.6 120 150 174.2 100 120.0¢ 80 100 105.0¢ 122.6 60 86.0¢ 50 82.2 40 54.0¢ 46.6 54.0 20 32.0¢ 36.0¢ 0 0 FY 01 FY 02 FY03 FY04 FY05 FY 06 FY 07 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 ROCCE
Slide 30: Strategy, Outlook & Markets
For personal use only building the world’s leading recycling company . . . Strategy, Outlook & Markets
Slide 31: Strategic Opportunities
Strategic Opportunities For personal use only Metals Recycling Consolidation offers greatest opportunity to create shareholder value Focus on North America (to consolidate existing positions and further extend footprint) and Europe Acquisition criteria • Target holds #1 or #2 market position
Slide 32: Outlook
Outlook For personal use only Demand – Global steel production up year on year heading to 1.3 billion tonnes (7 months annualised) – China continues to drive commodity prices – Other Asian economies also offsetting weakness in US economy Ferrous Scrap Prices – Global steel production remains rob
Slide 33: Outlook (cont.)
Outlook (cont.) For personal use only Competition – As intense as ever with surplus shredding capacity in key markets – Container “threat” ongoing, but strategies in place Technology – Further shredder upgrades, with quick payback, designed to recover non ferrous metals planned in FY08 – Plastic
Slide 34: Markets
Markets For personal use only “In 2007 real prices for all our major commodities remained at or near their highest levels since the 1970s as Chinese demand for raw materials continued” (BHP FY07 Annual Results Announcement) “Recent discussions with our customers have indicated that they do not e
Slide 35: Questions
For personal use only building the world’s leading recycling company . . . Questions
Sims Group — Merrill Lynch Australia Investment Conference (September 2007) on 6ix