Sims Ltd. · ASX:SGM
Sims — Sims Metal Management — H1 FY2014 Earnings Presentation
41 slides from Sims's earnings presentation, Feb 14, 2014
Slide 1: Interim Results, Half year ended 31 December 2013
For personal use only Interim Results Half year ended 31 December 2013 Galdino Claro, Group Chief Executive Officer Rob Larry, Group Chief Financial Officer 14 February 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: Financial Overview (HY14 v HY13)
Financial Overview (HY14 v HY13) For personal use only Sales Revenue Cash from operations $3,593m 5% $38m -51% Underlying EBITDA1 Net Debt $129m 38% $121m -59% Underlying EBIT Gearing (ND/ND+E) $68m 118% 5.7% -57% Underlying NPAT Underlying EPS (diluted) $42m 348% 20.3c 351% Statutory NPAT Statutory
Slide 4: Key Earnings Drivers
Key Earnings Drivers For personal use only A$m Underlying EBITDA of $129m, up 38% 30 129 North America EBITDA increased by $3m over -3 6 HY13, benefiting from higher sales volumes, 93 3 lower controllable costs. Higher earnings from Metals, offset by lower earnings from Sims Recycling Solutions (“SR
Slide 5: Earnings Recovery Slowly Building
Earnings Recovery Slowly Building For personal use only $m Group EBIT & EBITDA A$/t Underlying earnings slowly building despite 300 8% persistent challenging market conditions in 7% many of our key markets 250 6% Earnings improvement driven by performance 200 from metal recycling in North America, 5
Slide 6: Significant Cost Reductions Achieved
Significant Cost Reductions Achieved For personal use only $110 million in annualised underlying controllable cost reductions since H2 FY12, on a constant exchange rate basis. Targeted circa $100 million run rate exceeded. Cost reductions represent 9% reduction in underlying controllable costs Achie
Slide 7: External Operating Environment
External Operating Environment For personal use only United States Australia United Kingdom GDP Growth1 1.9% 2.3% 1.9% Unemployment2 6.6% 6.0% 7.1% Consumer 81 100 -7 Confidence3 Purchasing 51 47 57 Managers Index4 New Car Sales5 15.6m 1.1m 2.3m Steel Production6 87.0mt 4.6mt 11.9mt 1) Annual GDP gr
Slide 8: Operational Overview
Operational Overview For personal use only 8 Sales Volumes (mt2) HY13 HY14 6.13 5.93 6 +3% 4.23 4.34 4 2 0.90 0.98 0.80 0.81 0 North America Australasia Europe Total Group 80 68 EBIT1 (A$m) 60 48 +118% 40 31 20 20 12 11 2 7 0 North America Australasia Europe Total Group North America Australasia Eur
Slide 9: North America Regional Results
North America Regional Results For personal use only A$m HY14 HY13 Chg % Performance Sales Revenue 2,182.1 2,043.3 6.8 North America underlying EBITDA of $41m improved 9% over HY13 EBITDA1 41.1 37.7 9.0 Regional results impacted by lower earnings EBIT1 6.8 1.9 257.9 from SRS business Sales Volumes (
Slide 10: Australasia Regional Results
Australasia Regional Results For personal use only A$m HY14 HY13 Chg % Performance Sales Revenue 596.9 573.6 4.1 Australasia underlying EBITDA of $62m increased by 93%, boosted by stronger EBITDA1 61.9 32.1 92.8 volumes and sales margins, and increased income of joint ventures EBIT1 47.6 19.5 144.1
Slide 11: Europe Regional Results
Europe Regional Results For personal use only A$m HY14 HY13 Chg % Performance Sales Revenue 814.3 811.6 0.3 European Region underlying EBITDA of $23m was down 10% over HY13, with EBITDA1 23.3 25.9 (10.0) improved performance at UK Metals more than offset by UK SRS EBIT1 11.1 12.3 (9.8) Sales margins
Slide 12: Product Category Results
Product Category Results For personal use only EBITA1 (A$m) HY14 HY13 Chg % Performance Ferrous2 77.0 44.9 71.5 Ferrous EBITA increased 72%, due to stronger margins per tonne and higher sales Non Ferrous 31.4 36.6 (14.2) volumes from ferrous brokerage SRS 10.1 29.5 (65.8) Non-Ferrous EBITA down 14%
Slide 13: Financial Review
For personal use only Financial Review Rob Larry, Group CFO 13
Slide 14: Financial Results
Financial Results For personal use only (A$m) HY14 HY13 Change ($) Change (%) Sales Revenue 3,593.3 3,428.5 164.8 4.8 Statutory EBITDA 113.0 32.1 80.9 252.0 Underlying EBITDA 128.5 93.2 35.3 37.9 Statutory EBIT 52.1 (321.4) 373.5 nmf Underlying EBIT 67.6 31.0 36.6 118.1 Interest Expense (13.0) (12.9
Slide 15: Significant Items
Significant Items For personal use only North Group Pre-Tax After-Tax (A$m) Australasia Europe America Corporate Total Total Fixed Asset Impairment - - 2.3 - 2.3 2.3 Lease Settlements / Onerous Leases - 0.1 4.2 - 4.3 4.3 Redundancy Provisions - 2.5 0.3 0.3 3.1 2.8 Settlement of a Dispute with a 3rd
Slide 16: Cash Flows
Cash Flows For personal use only (A$m) HY14 HY13 Change (A$m) Net Cash Inflows from Operating Activities 37.8 76.4 (38.6) Capital Expenditure (29.2) (82.2) 53.0 Proceeds from Divestments 30.1 44.9 (14.8) Payments for Acquisitions of Subsidiaries, Net of Cash - (20.0) 20.0 Other Investing Activities,
Slide 17: Capital Expenditure
Capital Expenditure For personal use only A$m Capital expenditures reduced to $29m in HY14 Capital Expenditure Depreciation with New England expansion and New York City 200 Municipal Recycling (Phase I) projects now 180 complete 160 Full year FY14 capital expenditure expected to 140 be circa $90m, w
Slide 18: Debt and Gearing
Debt and Gearing For personal use only A$m Net debt reduced by $32.6 million from 30 June 1 Net Debt Gearing (RHS) 2013, to $121.2 million, at 31 December 2013 350 12% Net debt over total capitalisation declined to 300 10% 5.7%, from 7.4% at 30 June 2013 250 Low gearing is natural due to commodity p
Slide 19: Market Conditions and Outlook
For personal use only Market Conditions and Outlook Galdino Claro, Group CEO 19
Slide 20: Getting Back to Basics
Getting Back to Basics For personal use only Strategic Business Review – Initial Findings Strong core of operating assets with Sims Metal Management around which success can be built Opportunities for significant efficiency gains via best practice cross-fertilsation globally Initial goals will be to
Slide 21: Outlook
Outlook For personal use only Current market trading conditions clouded by issues around severe winter weather in North America & Europe, market disruption in Turkey and other emerging market economies, weakness in demand for US ferrous scrap exports Focus on business practices expected to drive fur
Slide 22: Appendix: Reporting segment information
For personal use only Appendix Reporting segment information
Slide 23: Financial Overview
Financial Overview For personal use only HY 2014 HY 2013 Change (%) Sales Revenue ($m) 3,593.3 3,428.5 4.8 Statutory EBITDA ($m) 113.0 32.1 252.0 Underlying EBITDA ($m)* 128.5 93.2 37.9 Goodwill & Intangible Asset Impairment ($m) 0.0 291.3 (100.0) Depreciation ($m) 51.0 50.3 1.4 Amortisation ($m) 9.
Slide 24: Sales Revenue by Region
Sales Revenue by Region For personal use only HY 2014 HY 2013 16.6% 16.7% 22.7% Australasia 23.7% North America Europe 60.7% 59.6% $m HY 2014 HY 2013 Change (%) • Sales revenues increased due to lower A$ exchange rates against the currencies of the Australasia 596.9 573.6 4.1 Group’s foreign subsidi
Slide 25: Sales Revenue by Product
Sales Revenue by Product For personal use only HY 2014 HY 2013 0.8% Ferrous Trading 0.8% 312.4% 15.3% Non Ferrous Shred Recovery 46.9% 47.0% Ferrous Brokerage 18.4% Non Ferrous Trading 19.2% Recycling Solutions 16.4% Manufacturing/Other 5.2% 13.3% 4.4% $m HY 2014 HY 2013 Change (%) • Ferrous brokera
Slide 26: EBITA by Region
EBITA (pre-goodwill & intangible asset impairment) by Region For personal use only $60 48.8 $50 ($’s in millions) $40 $30 15.3 $20 HY 2014 $10 8.2 3.5 1.5 (9.9) HY 2013 (2.7) $0 -$10 (5.0) -$20 (11.9) -$30 (25.8) $m HY 2014 HY 2013 Change (%) 1. EBITA by Region is before any add-back of significant
Slide 27: EBITA by Product
EBITA (pre-goodwill & intangible asset impairment) by Product For personal use only $80 71.8 $70 ($’s in millions) $60 $50 HY 2014 $40 $30 24.8 HY 2013 20.1 $20 18.3 14.5 12.9 8.8 $10 4.7 5.2 2.3 $0 $m HY 2014 HY 2013 Change (%) • EBITA by product is presented pre-corporate costs Ferrous Trading (in
Slide 28: Intake Volumes by Region
Intake Volumes by Region For personal use only HY 2014 HY 2013 13.3% 16.4% 13.8% 14.3% Australasia North America Europe 70.3% 71.9% • Australasia growth in intake reflects commercial Total Tonnes (‘000’s) HY 2014 HY 2013 Change (%) advantages from recent expansion an market Australasia 1,015 859 18.
Slide 29: Intake Volumes by Product
Intake Volumes by Product For personal use only HY 2014 HY 2013 4.4% 4.7% Ferrous Shredded (incl. NFSR) Other Processed 21.1% 24.4% 34.0% Ferrous 37.2% Ferrous Brokerage Non Ferrous Trading/Brokerage 37.2% 37.0% Total Tonnes (‘000’s) HY 2014 HY 2013 Change (%) • Ferrous brokerage tonnes associated w
Slide 30: Sales Volumes by Region
Sales Volumes by Region For personal use only HY 2014 HY 2013 13.2% 15.9% 13.4% 15.2% Australasia North America Europe 70.9% 71.4% Total Tonnes (‘000’s) HY 2014 HY 2013 Change (%) Australasia 975 899 8.5 North America 4,342 4,233 2.6 Europe 807 795 1.5 Total 6,124 5,927 3.3 30
Slide 31: Sales Volumes by Product
Sales Volumes by Product For personal use only HY 2014 HY 2013 4.5% 4.5% Ferrous Shredded (incl. NFSR) Other Processed 36.1% Ferrous 21.3% 24.8% 37.9% Ferrous Brokerage Non Ferrous Trading/Brokerage 34.6% 36.3% Total Tonnes (‘000’s) HY 2014 HY 2013 Change (%) • Ferrous brokerage tonnes associated wi
Slide 32: Significant Items by Region – HY 2014
Significant Items by Region – HY 2014 For personal use only North Group After-Tax Australasia Europe Pre-Tax Total America Corporate Total $m HY 2014 Fixed Asset Impairment $0.0 $0.0 $2.3 $0.0 $2.3 $2.3 Lease Settlements / Onerous Leases - 0.1 4.2 - 4.3 4.3 Redundancy Provisions 0.0 2.5 0.3 0.3 3.1
Slide 33: Significant Items by Region – HY 2013
Significant Items by Region – HY 2013 For personal use only North Group After-Tax Australasia Europe Pre-Tax Total America Corporate Total $m HY 2013 Non-cash Goodwill & Intangible Asset $0.0 $283.7 $0.0 $7.6 $291.3 $259.0 Impairment Fixed Asset Impairment - 14.8 - - 14.8 9.2 Natural Disaster Expens
Slide 34: Group Income Statement
Group Income Statement For personal use only $m HY 2014 HY 2013 Change ($) Change (%) Sales Revenue $3,593.3 $3,428.5 $164.8 4.8 Statutory EBITDA 113.0 32.1 80.9 252.0 Underlying EBITDA 128.5 93.3 35.2 37.7 Statutory EBIT 52.1 (321.4) 373.5 (116.2) Underlying EBIT 67.6 31.0 36.5 118.1 Interest Expen
Slide 35: Group Balance Sheet
Group Balance Sheet For personal use only As at 31 As at 30 June $m December 2013 2013 Change ($) Change (%) Current Assets $1,204.2 $1,149.3 54.9 4.8 Non-current Assets 1,790.2 1,768.1 22.1 1.2 Total Assets 2,994.4 2,917.4 77.0 2.6 Current Liabilities 669.9 671.4 (1.5) (0.2) Non-current Borrowings
Slide 36: Strategic Capital Allocations & Distribution to Shareholders
Strategic Capital Allocations & Distribution to Shareholders For personal use only $m HY 2014 HY 2013 Change ($) Net Cash Inflow from Operating Activities $37.8 $76.4 ($38.6) Capital Expenditures 29.2 82.2 (53.0) Acquisitions, net of cash acquired 0.0 20.0 (20.0) Share Repurchases 0.0 8.6 (8.6) Divi
Slide 37: North America Regional Results
North America Regional Results For personal use only HY 2014 HY 2013 Change (%) Sales Revenue ($m) $2,182.1 $2,043.3 6.8 Statutory EBITDA ($m) (1) $33.3 ($0.6) (5,650.0) Underlying EBITDA ($m) (2) $41.1 $37.7 9.0 Depreciation ($m) $25.1 $25.2 (0.4) Statutory EBITA ($m) (1) $8.2 ($25.8) (131.8) Under
Slide 38: Australasia Regional Results
Australasia Regional Results For personal use only HY 2014 HY 2013 Change (%) Sales Revenue ($m) $596.9 $573.6 4.1 Statutory EBITDA ($m) (1) $62.6 $27.5 127.6 Underlying EBITDA ($m) (2) $61.9 $32.1 92.8 Depreciation ($m) $13.8 $12.2 13.1 Statutory EBITA ($m) (1) $48.8 $15.3 219.0 Underlying EBITA ($
Slide 39: Europe Regional Results
Europe Regional Results For personal use only HY 2014 HY 2013 Change (%) Sales Revenue ($m) $814.3 $811.6 0.3 Statutory EBITDA ($m) $15.5 $7.7 101.3 Underlying EBITDA ($m) (1) $23.3 $25.9 (10.0) Depreciation ($m) $12.0 $12.7 (5.5) Statutory EBITA ($m) $3.5 ($5.0) (170.0) Underlying EBITA ($m) (1) $1
Slide 40: Ferrous and Non-Ferrous Prices
Ferrous and Non-Ferrous Prices For personal use only 440 US$/t (fob) 420 400 380 360 340 320 300 HMS 1/2 80:20 East Coast Export 280 HMS 1/2 80:20 West Coast Export HMS 1 Mid-West Domestic 260 Source: AMM Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 8,200 2,500 US$/t US$/t 8,000 7,800 2,000 7,60
Slide 41: HY14 Income Tax Expense Adjustments
HY14 Income Tax Expense Adjustments For personal use only HY14 (A$m) Profit Before Tax Income Tax Effective Tax % Statutory Result 44.0 34.8 79.1 Significant Items Write-off of Deferred Tax Assets (17.6) Other Significant Items 15.5 0.2 Underlying Profit Before Tax 59.5 17.4 29.2 41
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