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
Exhibit 99.2 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 financial anticipate, uncertainties. these (_SEC_), to statements, any regulation, reflect assumptions person forward measures condition, including we acting Cautionary which Our -looking undertake and inintend, on ability speak Australian uncertainties, results the ourStatements statemen
Slide 3: Financial Overview
Financial $68m 1. Underlying 5.7%Overview 118% excludes -57% (HY14 goodwill Underlying v HY13) andNPAT Sales other Underlying Revenue intangibleCash asset EPSfrom impairments, (diluted) operations $42m and $3,593m 348% all other 20.3c 5% significant 351% $38m -51% Statutory items Underlying n/m NPAT
Slide 4: Key Drivers of Earnings
KeyMetals, controllable sales UK Earnings volumeswere costs. Drivers coupled offset Higher A$m with byearnings weakness [Graphic an expansion from Appears in SRS, Metals, in sales particularly Here] offset margins, 93 by 3 Underlying in lower and thehigher UK earnings 1.EBITDA income Underlying from
Slide 5: Earnings recovery and net debt
Earnings 250 Net 2H12debt 6%1H13 ?reduced Recovery Earnings 2H13further 1H14 improvement Slowly 1to1Building $121m EBITdriven EBITDA or$m 5.7% by Group performance of EBITDA 3% EBIT 100& margin total EBITDA 200capitalisation from (RHS)A$/t metal 1. ?Underlying Underlying recycling due to cash in exc
Slide 6: Significant cost reductions achieved
Significant exceeded. cost Underlying 0.6514 reduction 6 Cost Cost excludes atreductions Reductions constant goodwill exchange represent Achieved and other rates2 9%$110 reduction intangible 1 million Costs in Costs asset inunderlying annualised America impairments, controllable Australasia underlyi
Slide 7: External Operating Environment
External Managers Latest Auto, ABS, monthly Operating Index4 SMMT) data New Environment (source: 6) Car 2013Sales5 Conference crude United 15.6m steel production States Board, 1.1m Australia 2.3m WestPac, change SteelUnited GfKNOP) Production over Kingdom previous 4)6 Latest 87.0mt year GDPmonthly (
Slide 8: Operational Overview
Operational lower joint weaker volumes ventures sales earnings in million margins Overview 5.93 from 6.13 metric Lower SRS, 2 +3% ) 8tonnes controllable (mt largely 0.80 HY13 80.81 in UK HY14 Europe costs SRS6inTotal operations 4.23 local4.34 Group currency 4Underlying Volumes 68 terms +118%20.90 ex
Slide 9: North America Regional Results
North (%) HY13 volumes non-core York15.1% Municipal America Regional Stronger Aerospace 15.4% Regional results Recycling sales A$m Metals impacted volumes 5Results 38Plant and 41 24 Birmingham, boosted during A$m by-33 lower HY14 7late HY13 byearnings HY14 improved HY13 Alabama Sales 1.from Chg% Und
Slide 10: Australasia Regional Results
Australasia 32.1 and Progress facility Other includes, market 92.8 2 isHY14 ?income expected volumes Commenced consolidation Regional EBITDA from and toResults become JV_s, sales new margins Sales margins, shredder associates, A$m operational Margin Costs HY14and development EBITDA (%) FX, HY13 incr
Slide 11: Europe Regional Results
Europe 20.6% with idling Metals intangible improved two A$m & Regional Global asset shredders 2 26 performance impairments, SRS Results 23 2during businesses 17 A$m -24FY13 atHY13 and UK HY14 1all Controllable Metals July Sales other HY13 2013 Volumes more significant Chg% UKcosts than SRS Sales Con
Slide 12: Product Results
Product (61.1) Ferrous down ferrous all other 14% (74.6) and 0.278 Category significant due precious (18.1) 0.266 to Results declining Amortisation items 4.5 metal Total Includes EBITA1 prices non-ferrous 6.124 (9.9) SRS all (A$m) 5.927 Ferrous Sales (11.9) prices, HY14 3.3Revenue (16.8) Performance
Slide 13: Financial Review
Financial Review Rob Larry, Group CFO 13
Slide 14: Financial Results
Financial EBIT (Expense) statutory 52.1to Results /(321.4) underlying Benefit (A$m) 373.5 (34.7) taxHY14 nmf 34.7 expense Underlying (69.4) HY13nmf(200.0) Change = EBIT not meaningful Statutory ($) 67.6 Change 31.0 Net 36.6 14 (%) Profit 118.1 Sales / Loss Revenue Interest AfterExpense 3,593.3 Tax 9
Slide 15: Significant Items
4.3 Redundancy Legal Significant CostsItems ——0.3 Provisions—2.5 North for 0.3 HY14 Group 0.2($0.7) Loss Pre-Tax 0.3 on $7.8 Sale 0.3After-Tax $7.8 3.1 of $0.6 Business 2.8 Settlement $15.5 (A$m)Divisions—6.6 $32.8 Australasia of 15 a Dispute Europe — with 6.6 America 6.6 a 3rd Insurance Party—0.4 C
Slide 16: Cash Flows
Cash Flows (14.8) Repayments Payments (A$m) / Borrowings forHY14 Acquisitions HY13 (28.6) Change 19.0 of Subsidiaries, (47.6) (A$m) Other Net Net Financing Cash of Cash Inflows Activities, — (20.0) from 20.0 Operating Net 0.6 Other (29.0) Activities Investing 29.6 Net 37.8 Activities, Cash 76.4Outfl
Slide 17: Capital Expenditure
Capital England shredder over pastExpenditure expansion in five Western years and 17 Australia A$mNew Capital York Management Expenditure City Municipal expects Depreciation Recycling FY14 capital 200 (Phase 180 expenditures I)160 projects 140 120 to now be 100 complete lower 80 60 than 40 Full depr
Slide 18: Debt and Gearing
Debtreduced debt commodity and Gearing price by $32.6 volatility A$mmillion Netand Debt from weak Gearing 30 industry June (RHS) 2013, conditions 1to 350 $121.2 12% Balance million, 300 10% sheet at250 capacity 31 8% December 200 readily 6%2013 150 supports Net 4% 100 debt the2% over business 50tota
Slide 19: Market Conditions and Outlook
Market Conditions and Outlook GaldinoClaro, Group CEO 19
Slide 20: Getting Back to Basics: Strategic Review
Getting Back efficiency excellence strategic review gains andtocontinuous Basics via to be best shared Strategic practice improvement withBusiness cross-fertilsation the market, Maximise Review not later globally _Initial returns thanFindings through Initial our fullgoals intelligent year Strong wil
Slide 21: Outlook
Outlook in across metals demand the recycling Current majority for USindustry. market ferrous of ourtrading scrap regions. 21 exports conditions However Focus clouded theonpace business byand issues extent practices around of the expected severe recovery winter to is drive still weather further limi
Slide 22: Appendix Reporting segment information
Appendix Reporting segment information
Slide 23: Financial Overview
Financial Intangible 118.1 inflow Tonnes 33 andStatutory from 34. (_000) Overview Asset 23operating (exc. NPAT Impairment HY associates) ($m) activities 20149.3 ($m) HY (296.1) 6,124 ($m) 2013 0.0 37.8 291.3 5,927 (103.1) Change 76.4 (100.0) 3.3Underlying (50.5) (%) Interim Depreciation Sales Capita
Slide 24: Sales Revenue by Region
A$ exchange Sales Revenuerates revenues by in Europe Region againstwere HY the 2014 currencies liftedHY by 2013 aof Europe the 16.6% Australasia 814.3 Australasia 811.6 596.9 0.323.7% 573.6 15.8%16.7% 4.1 increase Group_s 22.7% from foreign North UK Metals, America subsidiaries. offset Europe At by
Slide 25: Sales Revenue by Product
Sales Manufacturing/Other Trading JV Shred were Revenue Recovery 662.7 $286.7659.2 by million inProduct HY14 0.5 $mand Recycling HY SRS HY $253.9 2014 2014 negatively HY Solutions million, 0.8% 2013 impacted Ferrous inChange 440.2 HYTrading 2014 522.2 by(%) reclassification and Ferrous (15.7) 312.4%
Slide 26: EBITA by Region
EBITA (%) Amortisation goodwill and 2013goodwill Australasia Australasia (pre-goodwill & intangible and of (2) intangibles $(0.7) other 48.8 &asset intangible $4.6 intangible 15.3(9.9) impairment) North 219.0 (11.9) asset asset America North impairment. NMF impairment) $52.1 America $7.8 EBIT ($321.
Slide 27: EBITA by Product
EBITA Trading 18.3 (273.1) add back 8.8(pre-goodwill HY Recycling 4.7 of 2014 significant 2.3 HYHY Solutions 2014 2013 &items intangible HY 20.1 Manufacturing/JVs/Other in 2013 HY14 14.5 asset Change 5.2 andimpairment) EBITA HY13 (%) 71.8 by and product 12.9 by does EBITA Product 456.6 not is presen
Slide 28: Intake Volumes by Region
Intake HY 6,206 2014 6,000 Volumes HY3.4 2013 by 28 Region ChangeHY (%)2014 advantages HY 2013from 13.3% recent 16.4% expansion 13.8%an 14.3% market Australasia Australasia North 1,015 America 859 18.2 Europe impact 70.3% from 71.9% competitor “ Australasia restructuring growth North in intake Ameri
Slide 29: Intake Volumes by Product
Intake HY 6,206 Brokerage 2014 6,000 Volumes HY volumes 3.4 2013 by HYProduct Change improved 2013 4.7% HY (%)due 2014 21.1% Ferrous to lift 4.4% 37.2% Shred in both Ferrous 37.0% (inc. domestic Shredded NFSR) Ferrous and 2,108 brokerage (incl. export 2,235 NFSR) trade tonnes (5.7) from Other Other
Slide 30: Sales Volumes by Region
Sales Volumes North America by 4,342 Region 4,233 HY2.62014 Europe HY 807 2013795 13.2% 1.5 Total 15.9%6,124 13.4% 5,927 15.2% 3.3 Australasia 71.4% 30 North America Europe 70.9% Total Tonnes (_000_s) HY 2014 HY 2013 Change (%) Australasia 975 899 8.5
Slide 31: Sales Volumes by Product
Sales HY 2014 5,927 volumes Volumes 3.3improved 2013 HY 2013 by Change Product due 4.5%to (%)21.3% lift HYFerrous in2014 both 37.9% Shred 4.5% domestic 36.3% Ferrous (inc.Ferrous and NFSR) Shredded export brokerage 2,212 trade (incl. 2,248 from tonnes NFSR) (1.6) North associated Other Other America
Slide 32: Significant Items by Region HY 2014
Significant Settlements 0.9 of Deferred 1.0 Credit Items Tax / Onerous Provisions—0.9 Asset by Region — Leases—0.1 ——17.6 _ HY — 0.9 2014 Total 4.2—4.3 0.9Australasia Significant Other 4.3Legal Redundancy North Items Costs Europe for ——0.3 Provisions HY Group 2014 0.3($0.7) 0.2 0.0 Pre-Tax Loss 2.5$
Slide 33: Significant Items by Region HY 2013
Significant $291.3 18.0—20.7 —2.0 1.4 $259.0 Loss Items 15.3 Impairment onLoss by Sale Region on ofRevaluation Business Fixed _ HYAsset 2013 Divisions ofImpairment—14.8 Australasia CTG1.3Derivatives 10.4 North — 11.7 2.9 Europe — 14.8 ——2.9 11.1Group 9.2 Commerical Natural 2.9Pre-Tax Redundancy Disa
Slide 34: Group Statutory Income Statement
Group 37.7 (13.8) Statutory Tax Income (Expense) EBIT Statement 52.1 / Benefit $m (321.4) HY(34.7) 2014 373.5 34.7 HY (116.2) (69.4) 2013Underlying Change (200.0) Statutory ($)EBIT Change 67.6 Net (%) 31.0 Profit Sales 36.5 (Loss) Revenue 118.1 After Interest $3,593.3 Tax $9.3 Expense $3,428.5 ($296
Slide 35: Group Balance Sheet
Group 2,994.4 6.6 0.7 Balance Shareholders 2,917.4Sheet 77.0 Equity 2.6 As Current at 31 $1,999.6 AsLiabilities at 30$1,929.2 June669.9 $m70.4 December 671.4 3.6 Working (1.5) 2013 (0.2) 2013 Capital Non-current Change 534.3 ($) 477.9 Borrowings Change 56.4 11.8 (%) 184.1 Current Net189.1 Debt/(Net
Slide 36: Strategic Acquisitions, Capital Allocations
Strategic (53.0) Acquisitions, Capital Allocations net of cash & acquired Distribution 0.0 to 20.0 Shareholders (20.0) Share $mRepurchases HY 2014 HY 0.02013 8.6 (8.6) Change Dividends ($) Net 0.0 Cash20.4 Inflow (20.4) from Proceeds Operating fromActivities sale of businesses $37.8 $76.4 30.1($38.6
Slide 37: North America Regional Results
North 9.0 $37.7 (100.0) Volumes EBITA America and Amortisation (000’s) Depreciation EBIT Regional 4,364 are of adjusted 4,314 ($m) intangibles Results $25.1 1.2 forHY Sales significant $25.2 ($m) 2014 Volumes $9.2 (0.4) HYitems. $10.6 Statutory 2013 (000’s) See (13.2) Change 4,342 schedule EBITA Sta
Slide 38: Australasia Regional Results
Australasia Depreciation $0.5 975 significant 899 $0.48.5 25.0 items Regional Employees ($m) Statutory on$13.8 slides Results 1,013 EBIT $12.2 32 HY and 968 ($m) 13.1 2014 33. 4.6 (1) Statutory 38 Sales HY $48.3 2013 Margin $14.9 EBITA Change (%) 224.2 ($m) 27.7% (%) Underlying (1)Sales $48.8 20.6%—
Slide 39: Europe Regional Results
Europeon (10.0) intangibles Volumes items Depreciation Regional slides (000’s) ($m)32807 $0.2 Results and ($m) 795 $0.9 33.HY $12.0 1.5 Sales (77.8) Employees 2014 $12.7 Margin Statutory HY(5.5) 2013 %1,616 for EBIT Statutory Change HY13 1,845 ($m)(%) EBITA was (12.4) $3.3 Sales revised ($5.9) Sales
Slide 40: Ferrous and Non-Ferrous Prices
FerrousJan-13 Oct-12 Apr-13 Jul-13 and Non-Ferrous Oct-13 Apr-13 Jan-14 Jul-13 Prices Oct-13 Source: 440 Jan-14 US$/t LME,(fob) 8,200 COMEX 420 US$/t 400 40 2,500 380 360 US$/t 3408,000 320 HMS 7,8001/2 2,000 80:20 7,600 East7,400 Coast1,500 Export 7,200 HMS7,000 1/2 1,000 80:20 6,800 West Coast 6,6
Slide 41: HY14 Income Tax Expense
HY14 Income Significant Items Tax15.5 Expense 0.2 Underlying Adjustments Profit HY14 Before (A$m) TaxProfit 59.5 17.4 Before 29.2 Tax41Income Tax Effective Tax % Statutory Result 44.0 34.8 79.1 Significant Items Write-off of Deferred Tax Assets (17.6) Other
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