Slide 1: Financial Results Full year ended 30 June 2014
For personal use only Financial Results Full year ended 30 June 2014 Galdino Claro, Group Chief Executive Officer Rob Larry, Group Chief Financial Officer 22 August 2014
Slide 2: Disclaimer
Disclaimer For personal use only Cautionary Statements Regarding Forward-Looking Information This presentation may contain forward-looking statements, including statements about Sims Metal Management’s financial condition, results of operations, earnings outlook and prospects. Forward-looking statem
Slide 3: Agenda
Agenda For personal use only Results Overview Regional Performance Financial Results Strategic Progress Update Outlook Appendix 3
Slide 4: Strong earnings recovery and net cash position
Strong earnings recovery and net cash position For personal use only Sales Revenue Cash from operations $7,129m -1% $210m 29% Underlying EBITDA1 Net Cash $242m 27% $42m n/m Underlying EBIT Gearing $119m (net cash) 77% n/m Underlying NPAT Underlying EPS (diluted) $69m 333% 33.6c 336% Statutory NPAT S
Slide 5: Progress towards five year strategic plan
Progress towards 5 year strategic plan For personal use only 350 A$m 300 250 Clear pathway for further 200 +77% significant EBIT growth EBIT growth in FY14 150 100 Management 50 Improvement Initiatives Streamline Optimise Grow 0 FY13 FY14 Streamline Supplier Operational Product Quality Grow Target U
Slide 6: Earnings growth driven by Australia and UK Metals
Earnings growth driven by Australia and UK Metals For personal use only Underlying EBIT of $119m, up by 77% A$m North America EBIT decreased $21m over FY13 due to lower earnings from electronics recycling +40 (“SRS”) and lower sales volumes in metals recycling, impacted by severe winter weather +33
Slide 7: Regional Performance
For personal use only Regional Performance Rob Larry, Group CFO 7
Slide 8: North America Regional Results
North America Regional Results For personal use only A$m FY14 FY13 Chg % Performance North America underlying EBITDA of $83m was lower Sales Revenue 4,253.5 4,534.6 (6.2) by 19% over FY13 Underlying EBITDA 82.9 102.1 (18.8) Regional results impacted by 13% lower metal recycling volumes, abnormally s
Slide 9: Australasia Regional Results
Australasia Regional Results For personal use only A$m FY14 FY13 Chg % Performance Australasia underlying EBITDA of $114m increased Sales Revenue 1,223.9 1,083.1 13.0 by 46%, primarily driven by stronger earnings from Underlying EBITDA 114.1 78.1 46.1 Australia metals recycling Sales volumes 16% hig
Slide 10: Europe Regional Results
Europe Regional Results For personal use only A$m FY14 FY13 Chg % Performance Europe underlying EBITDA of $45m improved by Sales Revenue 1,651.6 1,575.3 4.8 345%, driven by solid performance at UK Metals and Underlying EBITDA 45.4 10.2 345.1 Germany SRS, more than offsetting increased losses at UK S
Slide 11: Product Category Results
Product Category Results For personal use only Underlying EBITA1 (A$m) FY14 FY13 Chg % Performance Ferrous EBITA increased 30%, due to stronger Ferrous2 150.5 116.0 29.7 margins per tonne driven by improved buying Non Ferrous 61.5 57.0 7.9 practices and lower controllable costs Non-Ferrous EBITA inc
Slide 12: Financial Review
For personal use only Financial Review Rob Larry, Group CFO 12
Slide 13: Financial Results
Financial Results For personal use only (A$m) FY14 FY13 Change (%) Sales Revenue 7,129.0 7,193.0 (0.9) Statutory EBITDA 124.8 (42.5) nmf Underlying EBITDA 242.4 190.4 27.3 Statutory EBIT (27.6) (470.4) nmf Underlying EBIT 118.5 66.9 77.1 Interest Expense (23.2) (25.5) 9.0 Interest Income 9.0 7.3 23.
Slide 14: FY14 Significant Items
FY14 Significant Items For personal use only North Pre-Tax After-Tax (A$m) Australasia Europe America Total Total Non-cash Goodwill & Intangible Asset Impairment $ - $28.5 $- $28.5 $22.9 Fixed Asset Impairment (2.4) 12.4 30.9 40.9 41.6 Write-down of Equipment Spares 0.6 0.2 - 0.8 0.7 Natural Disaste
Slide 15: Cash Flows
Cash Flows For personal use only (A$m) FY14 FY13 Change (A$m) Net Cash Inflows from Operating Activities 210.1 297.3 (87.2) Capital Expenditure (64.1) (149.0) 84.9 Proceeds from Divestments 38.4 44.9 (6.5) Payments for Acquisitions of Subsidiaries, Net of Cash - (28.1) 28.1 Other Investing Activitie
Slide 16: Capital Expenditure
Capital Expenditure For personal use only A$m Increased rigor around capital allocation in FY14 Capital Expenditure Depreciation 200 FY14 capital expenditures reduced to $64m with New England expansion and New York City 180 Municipal Recycling (Phase I) projects now 160 complete, and includes early
Slide 17: Financial Strength
Financial Strength For personal use only 1 Balance sheet strength through debt elimination A$m Net Debt Gearing (RHS) from cash flows was accomplished in FY14 350 12% Net debt was reduced by $196 million in FY14, to 300 10% net cash of $42 million, at 30 June 2014 250 8% Financial strength through l
Slide 18: Strategic Progress Update
For personal use only Strategic Progress Update Galdino Claro, Group CEO 18
Slide 19: A clear five-year strategic plan
A clear five-year strategic plan For personal use only Grow Optimise • Organic market share growth and feeder yard network expansion • Selective acquisitive growth Streamline • Strengthen supplier relationships • Return to growth in Global SRS with asset management and • Exploit local & global logis
Slide 20: Implementation progress ramping up
Implementation progress ramping up For personal use only Streamline Optimise Grow Implementation 1-2 years 3-4 years 5 years FY14 Progress • Decision to exit SRS business • Transactional profitability • Volume decline in FY14 due to in UK and Canada reporting implemented in a mix of divestments, adv
Slide 21: Early stage gains from strategy being realised
Early stage gains from strategy being realised For personal use only 140 A$m +19 0 +16 120 100 +31 -14 80 0 60 119 40 67 20 Streamline Optimise Grow 0 FY13 Streamline Supplier Operational Product Quality Grow Currency Benefit FY14 Underlying Relationships Excellence & Service Underlying EBIT & Logis
Slide 22: Outlook
For personal use only Outlook Galdino Claro, Group CEO 22
Slide 23: Outlook
Outlook For personal use only Implementation of five year strategic plan is gathering pace, with further benefits from our Streamline and Optimise phases to be delivered in FY15 50% of the $32 million in annual EBIT benefits from our Streamline program to be achieved in FY15 FY15 capex is expected t
Slide 24: Appendix A: External Operating Environment
For personal use only Appendix A External Operating Environment
Slide 25: External Operating Environment
External Operating Environment For personal use only United States Australia United Kingdom GDP Growth1 4.0% 3.5% 3.1% Unemployment2 6.2% 6.4% 6.4% Consumer 91 99 -2 Confidence3 Purchasing 58 51 55 Managers Index4 New Car Sales5 16.4m 1.1m 2.6m Steel Production6 87.0mt 4.6mt 11.9mt 1) Annual GDP gro
Slide 26: Appendix B: Reporting segment information
For personal use only Appendix B Reporting segment information
Slide 27: Financial Overview
Financial Overview For personal use only FY 2014 FY 2013 Change (%) Sales Revenue ($m) 7,129.0 7,193.0 (0.9) EBITDA ($m) 124.8 (42.5) (393.6) Underlying EBITDA ($m)* 242.4 190.4 27.3 Goodwill & Intangible Asset Impairment ($m) 28.5 304.4 (90.6) Depreciation ($m) 105.6 101.1 4.5 Amortisation ($m) 18.
Slide 28: Sales Revenue by Region
Sales Revenue by Region For personal use only FY 2014 FY 2013 17.2% 15.1% 23.2% Australasia 21.9% North America Europe 59.6% 63.0% $m FY 2014 FY 2013 Change (%) • Decline in North America sales revenue primarily relates to a 10% decline in sales Australasia 1,223.9 1,083.1 13.0 volume. North America
Slide 29: Sales Revenue by Product
Sales Revenue by Product For personal use only FY 2014 FY 2013 0.8% Ferrous Trading 0.8% 12.8% 13.5% Non Ferrous Shred Recovery 46.6% Ferrous Brokerage 48.1% 19.1% 18.8% Non Ferrous Trading Recycling Solutions 15.8% Manufacturing/Other 14.5% 4.9% 4.3% $m FY 2014 FY 2013 Change (%) • Ferrous brokerag
Slide 30: EBITA by Region
EBITA (pre-goodwill & intangible asset impairment) by Region For personal use only $100 74.9 $50 ($’s in millions) 10.1 $0 FY 2014 (11.7) (8.7) (18.3) FY 2013 -$50 (44.0) (22.4) -$100 -$150 (145.0) $m FY 2014 FY 2013 Change (%) 1. EBITA by Region is before any add-back of significant items other tha
Slide 31: Significant Items by Region – FY 2014
Significant Items by Region – FY 2014 For personal use only After-Tax Australasia North America Europe Pre-Tax Total Total $m FY 2014 Non-cash Goodwill & Intangible Asset Impairment $ - $28.5 $- $28.5 $22.9 Fixed Asset Impairment (2.4) 12.4 30.9 40.9 41.6 Write-down of Equipment Spares 0.6 0.2 - 0.8
Slide 32: Significant Items by Region – FY2013
Significant Items by Region – FY2013 For personal use only After-Tax Australasia North America Europe Pre-Tax Total Total $m FY 2013 Non-cash Goodwill & Intangible Asset Impairment $ - $300.7 $3.7 $304.4 $270.8 Impairment of Investment in Associate 14.9 - 14.9 14.9 Fixed Asset Impairment - 17.1 44.1
Slide 33: EBITA by Product
EBITA (pre-goodwill & intangible asset impairment) by Product For personal use only $150 136.4 ($’s in millions) $100 60.9 44.4 42.1 $50 9.7 13.7 4.2 FY 2014 $0 FY 2013 -$50 (28.7) (63.7) -$100 (65.1) $m FY 2014 FY 2013 Change (%) • EBITA by product is presented pre-corporate costs (both group and r
Slide 34: EBIT Change by Product
EBIT (pre-goodwill and intangible asset impairment) Change by Product For personal use only 60 40 20 0.9 0 4.1 $ million -20 21.7 -40 32.9 -60 1.4 18.8 -80 -166.0 -100 -120 88.0 -140 -160 -180 Ferrous Non-ferrous FY13 Restated Recycling Mfg/ JV’s/ Corporate Amortisation of Trading & Trading & FY14 E
Slide 35: EBIT Change by Region
EBIT (pre-goodwill and intangible asset impairment) Change by Region For personal use only 60 40 20 0 4.1 0.9 $ million -20 -40 101.0 -60 -80 -166.0 -100 -3.0 -120 -140 64.8 -160 -180 FY13 Restated Amortisation of Australasia North America Europe FY14 EBIT EBIT intangibles 35
Slide 36: Intake Volumes by Region
Intake Volumes by Region For personal use only FY 2014 FY 2013 13.5% 17.1% 12.9% 14.1% Australasia North America Europe 69.4% 73.0% Total Tonnes (‘000’s) FY 2014 FY 2013 Change (%) • Increase in Australasia reflects market gains in Australia from both organic growth and Australasia 2,009 1,758 14.3
Slide 37: Intake Volumes by Product
Intake Volumes by Product For personal use only FY 2014 FY 2013 Ferrous Shredded 4.7% 0.0% 4.5% 0.2% (incl. NFSR) Other Processed Ferrous 24.2% 34.8% 23.0% Ferrous Brokerage 35.5% Non Ferrous Trading/Brokerage Other 36.3% 36.8% Total Tonnes (‘000’s) FY 2014 FY 2013 Change (%) • Ferrous brokerage ton
Slide 38: Sales Volumes by Region
Sales Volumes by Region For personal use only FY 2014 FY 2013 13.6% 17.4% 12.9% 13.8% Australasia North America Europe 69.0% 73.3% Total Tonnes (‘000’s) FY 2014 FY 2013 Change (%) • Sales remained in balance with intake volumes. Australasia 2,054 1,764 16.4 • Increase in Australasia reflects market
Slide 39: Sales Volumes by Product
Sales Volumes by Product For personal use only FY 2014 FY 2013 Ferrous Shredded 4.8% 0.0% 4.3% 0.3% (incl. NFSR) Other Processed Ferrous 24.1% 36.2% Ferrous Brokerage 22.2% 35.3% Non Ferrous Trading/Brokerage Other 34.9% 37.9% Total Tonnes (‘000’s) FY 2014 FY 2013 Change (%) • Ferrous brokerage tonn
Slide 40: Sales by Destination
Sales by Destination For personal use only FY2014 FY2013 10% 12% Domestic 12% USA / Canada 32% 37% 11% South / Central America Europe Middle East 12% China & HK 13% 1% Northeast Asia 4% 1% 3% SE Asia / Oceania 3% 3% 21% 25% 40
Slide 41: Group Income Statement
Group Income Statement For personal use only $m FY 2014 FY 2013 Change ($) Change (%) Sales Revenue $7,129.0 $7,193.0 ($64.0) (0.9) EBITDA 124.8 (42.5) 167.3 (393.6) Underlying EBITDA 242.4 190.4 52.0 27.3 EBIT (27.6) (470.4) 442.8 (94.1) Underlying EBIT 118.5 66.9 51.6 77.1 Net Interest Expense (14
Slide 42: Group Balance Sheet
Group Balance Sheet For personal use only As of 30 June As of 30 June $m 2014 2013 Change ($) Change (%) Current Assets $1,107.0 $1,149.3 (42.3) (3.7) Non-current Assets 1,542.4 1,768.1 (225.7) (12.8) Total Assets 2,649.4 2,917.4 (268.0) (9.2) Current Liabilities 677.6 671.4 6.2 0.9 Non-current Borr
Slide 43: Group Cash Flow
Group Cash Flow For personal use only $m FY 2014 FY 2013 Change ($) (Loss) / Profit for the year ($88.9) ($467.3) $378.4 Adjustments for non-cash items Depreciation and amortisation 123.9 123.5 0.4 Unrealised loss/(gain) on held for trading derivatives 8.5 (2.1) 10.6 Impairment of goodwill, PP&E & i
Slide 44: North America Regional Results
North America Regional Results For personal use only FY 2014 FY 2013 Change (%) Sales Revenue ($m) 4,253.5 4,534.6 (6.2) EBITDA ($m) 41.6 39.8 4.5 Underlying EBITDA ($m) (1) 82.9 102.1 (18.8) Depreciation ($m) 53.3 48.5 9.9 EBITA ($m) (11.7) (8.7) 34.5 Underlying EBITA ($m) (1) 29.6 53.6 (44.8) Good
Slide 45: Australasia Regional Results
Australasia Regional Results For personal use only FY 2014 FY 2013 Change (%) Sales Revenue ($m) 1,223.9 1,083.1 13.0 EBITDA ($m) 102.5 35.2 191.2 Underlying EBITDA ($m) (1) 114.1 78.1 46.1 Depreciation ($m) 27.6 25.1 10.0 EBITA ($m) 74.9 10.1 641.6 Underlying EBITA ($m) (1) 86.5 53.0 63.2 Goodwill
Slide 46: Europe Regional Results
Europe Regional Results For personal use only FY 2014 FY 2013 Change (%) Sales Revenue ($m) $1,651.6 $1,575.3 4.8 EBITDA ($m) ($19.3) ($117.5) (83.6) Underlying EBITDA ($m) (1) $45.4 $10.2 345.1 Depreciation ($m) 24.7 27.5 (10.2) EBITA ($m) ($44.0) ($145.0) (69.7) Underlying EBITA ($m) (1) $20.7 ($1
Slide 47: FY14 Income Tax Expense Considerations
FY14 Income Tax Expense Considerations For personal use only Profit (Loss) Income Tax $m Before Tax Expense ETR Statutory Result ($41.8) $47.1 112.7% Reconciling Items: Impact of Significant Items 146.1 6.0 Write-off of U.S. Deferred Tax Asset - (17.6) Underlying Losses not Tax Benefited - (5.8) Oth