Slide 1: Financial Results Half year ended 31 December 2017
For personal use only Financial Results Half year ended 31 December 2017 16 February 2018 ASX:SGM USOTC:SMSMY
Slide 2: Agenda
Agenda For personal use only Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Strategic Priorities & Outlook Alistair Field, Group CEO Torch cutting former Tappan Zee Bridge - Albany, New York 2
Slide 3: 1H FY18 Highlights: Increased earnings, net cash and return on capital
1H FY18 Highlights: Increased earnings, net cash and return on capital For personal use only Continued growth in earnings and return on capital Underlying EBIT of $124 million, up 60% over prior half year Underlying NPAT of $81 million, up 36% over prior half year Underlying Return on Capital1
Slide 4: Financial Summary: Material improvement across all key metrics
Financial Summary: Material improvement across all key metrics For personal use only Sales Revenue Sales Volumes $2,977 million 4.76 million tonnes 1H FY17 1H FY17 $2,385 million +25% 4.36 million +9% Underlying1 EBITDA Net Cash $180 million $390 million 1H FY17 30 June 2017 $133 million +35% $373 m
Slide 5: Employee Health & Safety: Safety remains our first priority
Employee Health & Safety: Safety remains our first priority For personal use only Safety performance Safety remains our most important priority Total recordable injuries (TRIFR) down 8% from FY17 and 63% since FY13 Total Recordable Injury Frequency Rate (TRIFR)1 3.5 3.3 63% reduction in TRIFR
Slide 6: Performance by Quarter: Internal improvements driving increased earnings leverage
Performance by Quarter: Internal improvements driving increased earnings leverage For personal use only Underlying EBIT by Quarter1 Internal improvements and operating discipline driving higher EBIT per tonne - 1Q FY18 EBIT was circa $10 million higher 90 3.0 than 1Q FY17 on similar sales volumes
Slide 7: Performance by Business: North America and ANZ Metals leading earnings growth
Performance by Business: North America and ANZ Metals leading earnings growth For personal use only North America Metals Australia & New Zealand Metals Underlying EBIT of $65 million, up 112% Underlying EBIT of $44 million, up 71% Sales volume growth of 12% over the prior half-year, Sales vo
Slide 8: Joint Venture Performance
Joint Venture Performance: Leveraging the strengths of our joint venture partnerships For personal use only North America Metals JV’s: - SA Recycling: 74 facilities - Richmond Steel Recycling: 4 facilities - Rondout Iron & Metal: 1 facility Partnerships create national coverage across 18 US stat
Slide 9: Positioned for Tomorrow: Financial Results
For personal use only Positioned for Tomorrow Financial Results Stephen Mikkelsen, Group CFO 9
Slide 10: Group Financial Performance: Earnings leverage driving significantly improved earnings
Group Financial Performance: Earnings leverage driving significantly improved earnings For personal use only A$m 1H FY17 1H FY18 % Chg Sales revenue increased 25% due to stronger sales volumes and higher commodity prices Sales revenue 2,384.7 2,977.0 24.8% Statutory EBITDA 153.3 178.6 16.5% Unde
Slide 11: Business Segment EBIT and Volumes
Business Segment EBIT and Volumes: Improvement across both sales and intake volumes For personal use only Underlying EBIT (A$m) 1H FY17 1H FY18 Chg % North America Metals underlying EBIT of $65 million, up 112% North America Metals 30.7 65.0 111.7 - 12% higher sales volumes and improved metal ANZ
Slide 12: Product Segment Sales Volumes & Revenue: Strong growth in ferrous metals
Product Segment Sales Volumes & Revenue: Strong growth in ferrous metals For personal use only Sales volumes (‘000 tonnes) 1H FY17 1H FY18 Chg % Sales by Product Ferrous Trading 3,505 3,749 7.0 Ferrous Trading and Brokerage volumes both significantly improved over the prior half year Ferrous Broke
Slide 13: Cash Flow Statement
Cash Flow Statement: Strong operating cash flow driving positive free cash flow For personal use only A$m 1H FY17 1H FY18 Operating cash flow of $131 million, up 15% Underlying EBITDA 132.9 179.7 - Meaningfully improved operating cash flow driven by higher underlying EBITDA Change in working capit
Slide 14: Capital Expenditure: Directing capital spending to internal growth initiatives
Capital Expenditure: Directing capital spending to internal growth initiatives For personal use only Capital Expenditure Net cash balance of $390 million as of 31 December 2017 to support healthy pipeline of internal initiatives 250 1H FY18 capex of $85 million expected to accelerate in 2H FY18
Slide 15: Dividend & Shareholder Returns
Dividend & Shareholder Returns: Dedicated to improving shareholder capital returns For personal use only Near-Term: Long-Term: Strong balance sheet supports higher dividend Sustainable capital management strategy Interim dividend of 23 cents per share declared 1) Establish Capital Plan - 100% fran
Slide 16: Positioned for Tomorrow: Strategic Priorities & Outlook
For personal use only Positioned for Tomorrow Strategic Priorities & Outlook Alistair Field, Group CEO 16
Slide 17: Strategic Priorities: Investment in technology, processes, and people
Strategic Priorities: Investment in technology, processes, and people For personal use only Focus on People, Establish Accelerate Internal Accelerate Internal Plan & Invest for Culture and Continuous Investments Investments Long-term Growth Leadership Improvement Prioritisation of metallic Stand
Slide 18: Internal Investments & Capital Projects
Internal Investments & Capital Projects: Prioritising and accelerating internal investments For personal use only • Non-ferrous material recovery plant (MRP) upgrades in Jersey City and Chicago Operations • Installation of multiple copper wire chopping plants across the US, UK, and Australia Logisti
Slide 19: Summary: Outlook positive; internal investment & external market growth
Summary: Outlook positive; internal investment & external market growth For personal use only 1H FY18 Highlights Underlying EBIT of $124 million, significantly higher than $77 million in the prior half-year Underlying Return on Capital of 10.5%, exceeding the five-year target set in FY13 Inter
Slide 20: Appendix
For personal use only Appendix 20
Slide 21: Declining steel exports from China, lifting ferrous scrap demand & prices
Declining steel exports from China, lifting ferrous scrap demand & prices For personal use only China Steel Exports China’s exports of steel have been declining vs Ferrous Scrap Price since mid-2016 - China’s annual steel exports have fallen ~40% 140 500 since July 2016 - Lower exports are support
Slide 22: Pollution control in China is driving higher demand for ferrous scrap
Pollution control in China is driving higher demand for ferrous scrap For personal use only Desire to reduce carbon emissions is driving Premium for 62% vs 58% iron ore premiums for high grade iron ore and greater Premium for ‘high-grade’ use of ferrous scrap $35 raw materials expanding 70% $30 60
Slide 23: Significant room for higher scrap collection in the US
Significant room for higher scrap collection in the US For personal use only US ferrous collection rates remains 20% United States below long-term averages, highlighting Ferrous Scrap Collection (per capita) 250 significant room for further growth Collection (kg per capita) 200 201 Australia’s c
Slide 24: Group Profit & Loss
Group Profit & Loss For personal use only A$m 1H FY17 1H FY18 Chg % Sales revenue 2,384.7 2,977.0 24.8 Statutory EBITDA 153.3 178.6 16.5 Underlying EBITDA 132.9 179.7 35.2 Statutory EBIT 97.4 122.4 25.7 Underlying EBIT 77.0 123.5 60.4 Net Interest expense (5.0) (4.4) (12.0) Statutory tax expense (12
Slide 25: North America Metals
North America Metals For personal use only A$m 1H FY17 1H FY18 Chg % Sales Revenue 1,111.0 1,515.7 36.4 Statutory EBITDA 81.4 95.7 17.6 Underlying EBITDA 61.7 96.0 55.6 Depreciation 26.6 27.1 1.9 Amortisation 4.4 3.9 (11.4) Statutory EBIT 50.4 64.7 28.4 Underlying EBIT 30.7 65.0 111.7 Assets 1,202.8
Slide 26: Australia & New Zealand Metals
Australia & New Zealand Metals For personal use only A$m 1H FY17 1H FY18 Chg % Sales Revenue 491.6 529.0 7.6 Statutory EBITDA 39.5 57.5 45.6 Underlying EBITDA 39.9 58.9 47.6 Depreciation 13.8 14.6 5.8 Amortisation 0.2 0.1 (50.0) Statutory EBIT 25.5 42.8 67.8 Underlying EBIT 25.9 44.2 70.7 Assets 534
Slide 27: Europe Metals
Europe Metals For personal use only A$m 1H FY17 1H FY18 Chg % Sales Revenue 414.9 542.0 30.6 Statutory EBITDA 22.1 22.8 3.2 Underlying EBITDA 22.1 18.8 (14.9) Depreciation 6.3 6.2 (1.6) Amortisation 0.0 0.0 - Statutory EBIT 15.8 16.6 5.1 Underlying EBIT 15.8 12.6 (20.3) Assets 256.0 338.1 32.1 Intak
Slide 28: Global E-Recycling
Global E-Recycling For personal use only A$m 1H FY17 1H FY18 Chg % Sales Revenue 353.9 365.0 3.1 Statutory EBITDA 17.0 11.6 (31.8) Underlying EBITDA 15.4 10.6 (31.2) Depreciation 4.3 4.1 (4.7) Amortisation 0.0 0.0 - Statutory EBIT 12.7 7.5 (40.9) Underlying EBIT 11.1 6.5 (41.4) Assets 392.5 402.5 2.
Slide 29: Corporate & Unallocated
Corporate & Unallocated For personal use only A$m 1H FY17 1H FY18 Chg % Sales Revenue 13.3 25.3 90.2 Statutory EBITDA (6.7) (9.0) (34.3) Underlying EBITDA (6.2) (4.6) 25.8 Depreciation 0.3 0.2 (33.3) Amortisation 0.0 0.0 - Statutory EBIT (7.0) (9.2) (31.4) Underlying EBIT (6.5) (4.8) 26.2 Assets 270
Slide 30: 1H FY18 income tax expense considerations
1H FY18 income tax expense considerations For personal use only A$m Profit Before Tax Income Tax Expense Effective Tax % Statutory Result 118.0 26.5 22.5 Reconciling items: Impact from US Tax Reform 9.8 Underlying Results 36.3 30.8 30
Slide 31: Significant items by region – 1H FY18
Significant items by region – 1H FY18 For personal use only NA ANZ Europe Global Pre-Tax After-Tax 1H FY18 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Reversal of fixed asset - - - (0.6) - (0.6) (0.6) impairment Net benefit relating to lease - - (4.0) (0.4) - (4.4) (3.7) settlemen
Slide 32: Significant items by region – 1H FY17
Significant items by region – 1H FY17 For personal use only NA ANZ Europe Global Pre-Tax After-Tax 1H FY17 (A$m) Unallocated Metals Metals Metals E-Recycling Total Total Reversal of fixed asset (0.9) - - (1.4) - (2.3) (1.8) impairment Gain on sale of property (24.3) - - - - (24.3) (24.3) Yard closur
Slide 33: Financial summary – Group
Financial summary – Group For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H FY17 1H FY18 Group Results Sales Revenue 7,453 8,847 9,036 7,193 7,129 6,311 4,652 5,079 2,385 2,977 Underlying EBITDA 379 414 253 190 242 263 184 295 133 180 Underlying EBIT 235 283 123 67 119 142 58 182
Slide 34: Financial summary – Segment
Financial summary – Segment For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H FY17 1H FY18 Sales Revenue North America Metals 4,834 5,782 5,773 4,256 3,996 3,417 2,353 2,418 1,111 1,516 ANZ Metals 1,126 1,300 1,190 1,047 1,188 1,053 744 981 492 529 Europe Metals 783 954 1,056 935
Slide 35: Financial summary – Segment (cont.)
Financial summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H FY17 1H FY18 Sales tonnes (‘000) North America Metals 9,906 10,964 11,080 9,377 8,152 7,018 5,772 5,454 2,735 3,059 ANZ Metals 1,578 1,764 1,765 1,764 2,054 1,874 1,418 1,656 862 891 Europe Metal
Slide 36: Financial summary – Segment (cont.)
Financial summary – Segment (cont.) For personal use only A$m FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H FY17 1H FY18 Sales tonnes (‘000) Ferrous Trading 9,068 10,115 10,320 9,396 9,331 8,325 6,768 7,009 3,505 3,749 Ferrous Brokerage 3,264 3,518 3,597 2,840 1,918 1,617 1,307 1,237 628 786 Non Ferrou
Slide 37: Metals Recycling global footprint
Metals Recycling global footprint For personal use only Europe Metals North America Metals UK United States & Canada Australia & New Zealand Metals Australia New Zealand Metal Shredder (100% owned) Metal Shredder (50% JV owned) 37
Slide 38: Electronics Recycling global footprint
Electronics Recycling global footprint For personal use only Europe, Africa, and Middle East UAE Europe North America South Africa United States Asia Pacific India Singapore Australia New Zealand Electronics Recycling facility 38
Slide 39: Disclaimer
Disclaimer For personal use only The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 16 February 2018. It is provided in summary form and does not purport to be complete. It should be read in conjunction with