Slide 1: Financial Results
Financial Results Half year ended 31 December 2018 20 February 2019
Slide 2: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities (primarily: metal recycling, municipal recycling and electronics recycling) current at the date of the presentation, 20 February 2019. It is provided in summary form and does not purport
Slide 3: Agenda
Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Alistair Field, Group CEO 3
Slide 4: 1H FY19 Themes
1H FY19 Themes Solid result despite a more challenging market Resilient underlying earnings with good volume and sales growth Underlying EBIT1 of $109.6 million, down 12.3% over prior corresponding period Underlying NPAT1 of $76.7 million, down 7.1% over prior corresponding period Sales revenu
Slide 5: Summary of Financial Outcomes
Summary of Financial Outcomes: Good volumes and sales growth offset by tighter margins Sales Revenue Sales Volumes $3,334.1 million 4.951 million tonnes 1H FY18 1H 1H 4.30 FY18 million | 2H 4.25 million $2,977.0 million +12.0% +4.0% 4.761 million tonnes Underlying1 EBITDA Net Cash $173.8 million $15
Slide 6: Employee Health & Safety: Safety first
6 Employee Health & Safety: Safety first Safety performance Safety remains our most important priority for both our employees and the community 3.0 2.8 Chief Risk Officer, encompassing safety, Total Recordable Injury Frequency Rate (TRIFR)1 appointed as direct report to CEO 2.5 2.2 1H FY19 TRI
Slide 7: Sustainability
Sustainability Core to our business and the way we do business Sims makes a positive contribution As a result of Sims recycling nearly 10 million tonnes of metals (ferrous, aluminium, copper and more) each year we contribute to preserving our planet Ferrous1 - Using recycled ferrous vs. virgin m
Slide 8: Group Financial Performance
Group Financial Performance Good sales revenue and volume growth off-set by tighter margins A$m 1H FY18 1H FY19 % Chg Strong sales revenue up 12% over prior Sales revenue 2,977.0 3,334.1 12.0 corresponding period Statutory EBITDA 178.6 173.1 -3.1 Good sales volume growth across North American 1
Slide 9: Markets
Markets Difficult market conditions but signs of improvement are emerging Turkey – Average cargoes / month fell 41% Copper – Global demand for scrap forecast to grow Korea Demand for Copper Scrap (tonnes) Global Demand for Copper Scrap (ktonnes) Average Turkey cargoes / month 390 50 16,000 Turkey HM
Slide 10: Financial Results
Financial Results Stephen Mikkelsen, Group CFO 10
Slide 11: Business Segment Financial Performance
Business Segment Financial Performance Strong volumes growth from ANZ Metals and North America Metals Sales volumes Underlying EBIT (A$m) 1H FY18 1H FY19 Chg % 1H FY18 1H FY19 Chg % (million tonnes) North America Metals1 2,341 2,517 7.5 North America Metals 34.7 32.0 -7.8 ANZ Metals1 824 875 6.2 Eur
Slide 12: North American Metals
12 North American Metals Strong result from disciplined buying and product optionality from technology investment A$m 1H FY18 1H FY19 % Chg Underlying EBIT adjusted for internal Underlying EBIT 34.7 32.0 -7.8 recharges was $55.3 million, up 11.3% Internal recharges 15.0 23.3 55.3 over prior corres
Slide 13: Australia & New Zealand Metals
13 Australia & New Zealand Metals Continued strong margins with underlying earnings growth A$m 1H FY18 1H FY19 % Chg Underlying EBIT adjusted for internal Underlying EBIT 44.2 43.9 -0.7 recharges was $51.8 million, up 3.4% over Internal recharges 5.9 7.9 33.9 prior corresponding period Underlying
Slide 14: Europe Metals
14 Europe Metals Challenging market conditions with quality initiatives in place for 2H FY19 A$m 1H FY18 1H FY19 % Chg Underlying EBIT adjusted for internal Underlying EBIT 11.6 (0.9) -107.8 recharges of $6.8 million, down 59.5% over Internal recharges 5.2 7.7 48.1 prior corresponding period Under
Slide 15: Global Electronics Recycling
15 Global Electronics Recycling Significant margin compression compared to 2H FY18 A$m 1H FY18 1H FY19 % Chg Underlying EBIT adjusted for internal Underlying EBIT 6.5 6.3 -3.1 recharges of $10.0 million, up 3.1% over Internal recharges 3.2 3.7 15.6 prior corresponding period Underlying EBIT (exclu
Slide 16: SA Recycling
16 SA Recycling A strong professional business with unique advantages A$m 1H FY18 1H FY19 % Chg Underlying EBIT of $16.8 million, down Underlying EBIT (50% share) 25.1 16.8 -33.1 33% over prior corresponding period Volumes (million tonnes) (50% share) 736 840 14.1 Strong volume improvement parti
Slide 17: Global Trading
17 Global Trading Increased costs largely timing in nature A$m 1H FY18 1H FY19 % Chg Global Trade Underlying EBIT 5.5 11.8 114.5 Underlying EBIT excluding internal Internal recharges (10.4) (19.1) 83.7 recharges represents external brokerage Underlying EBIT (excluding internal recharges) (4.9) (7.
Slide 18: Corporate & Unallocated
18 Corporate & Unallocated Lower corporate costs and improved JV performance off-set by reduced paper price Corporate SG&A (A$m) 1H FY18 1H FY19 % Chg Corporate SG&A Underlying EBIT (9.9) (1.8) -81.8 Underlying EBIT adjusted for internal Internal recharges (22.1) (27.3) 23.5 recharges of -$29.1 mi
Slide 19: Product Segment Sales Volumes
Product Segment Sales Volumes Adjusted underlying volumes meaningfully improved Sales volumes (million tonnes) 1H FY18 1H FY19 Chg % Sales Volumes by Region North America Metals 2,341 2,517 7.5 Total volumes grew by 4.0% in 1H FY19 ANZ Metals 824 875 6.2 North America volumes up 7.5% in 1H FY19
Slide 20: Underlying EBIT by Quarter
20 Underlying EBIT by Quarter Q2 FY19 was tough but 2H FY19 commenced with some early signs of improvement Q2 FY19 more challenging driven by: Underlying EBIT by Quarter1 Short term impact of market volatility 90 3.0 Europe Metals experiencing Turkey pricing pressure and increased demand for h
Slide 21: Net Cash Position
Net Cash Position New and changing markets have driven additional investment in working capital A$m 1H FY19 Net Cash at 30 June 2018 298.1 Underlying EBITDA 173.8 Working Capital Change in working capital (102.5) - $50 million - Customer mix Net interest and tax paid (49.2) - $20 million - Sims Pa
Slide 22: Capital Expenditure
Capital Expenditure: Capital allocation towards high returning opportunities Capital Expenditure Net cash balance of $153.6 million as at 31 December continues to support growth initiatives Forecast total capex of $160 million in FY19 200 Higher allocation towards Sustaining Capex over 180 Gro
Slide 23: Internal Initiatives
Internal Initiatives: Continuing to deliver initiatives 1H FY19A - $5 million FY19E - $16 million FY20E - $5 million Supplier Supplier Relations, 3% Relations, 1% National Continuous Sword, 25% Improvement, Continuous 26% Improvement, 35% National Sword, National 71% Sword, 64% Continuous Improvemen
Slide 24: Strategic Progress & Outlook
Strategic Progress & Outlook Alistair Field, Group CEO 24
Slide 25: Investing for the future
Investing for the future First installs of Zorba Separation and Copper Granulation Plants exceeding initial expectations North America Metals - Two new state of the art Material Recovery Plants (Jersey City, Chicago) - Two Zorba separation plants (Jersey City, Chesapeake) - Six local copper granulat
Slide 26: FY19 Priorities
FY19 Priorities Priorities balance growth with enhancing the existing business Capital Projects • Optimising returns from investments in quality improvement capital projects • Continued disciplined approach to executing projects Improving Capability • People, culture and leadership • Data management
Slide 27: Conclusion & Outlook
Conclusion & Outlook: Resilience shown despite challenging markets and attractive long-term growth outlook 1H FY19 Underlying NPAT of $76.7 million, 7.1% lower than $82.6 million in the prior corresponding period Volume of 4.951 million tonnes, 4.0% higher than 4.761 million tonnes in the prior
Slide 28: Questions & Answers
Questions & Answers 28
Slide 29: Appendix
Appendix 29
Slide 30: Cash Flow Statement
Cash Flow Statement A$m 1H FY18 1H FY19 Underlying EBITDA 181.2 173.8 Change in working capital (11.1) (102.5) Net interest and tax paid (30.9) (49.2) Equity result net of dividends received (20.1) (16.0) Other non-cash items 12.1 13.9 Operating cash flow 131.2 20.0 Capital expenditure (84.7) (84.5)
Slide 31: Group Profit & Loss
Group Profit & Loss A$m 1H FY18 1H FY19 Chg % Sales revenue 2,977.0 3,334.1 12.0 Statutory EBITDA 178.6 173.1 -3.1 Underlying EBITDA 181.2 173.8 -4.1 Statutory EBIT 122.4 108.9 -11.0 Underlying EBIT 125.0 109.6 -12.3 Net Interest expense (4.4) (2.9) 34.1 Statutory tax (expense)/benefit (26.5) (29.5)
Slide 32: North America Metals
North America Metals A$m 1H FY18 1H FY19 Chg % Sales Revenue 1,177.4 1,401.0 19.0 Statutory EBITDA 61.0 60.9 -0.2 Underlying EBITDA 61.3 61.1 -0.3 Depreciation 22.7 25.1 10.6 Amortisation 3.9 4.0 2.6 Statutory EBIT 34.4 31.8 -7.6 Underlying EBIT 34.7 32.0 -7.8 Assets 926.6 1,112.4 20.1 Intake Volume
Slide 33: Investment in SA Recycling
Investment in SA Recycling A$m 1H FY17 1H FY18 1H FY19 Chg % Statutory EBIT 10.9 25.1 21.9 -12.7 Underlying EBIT 10.9 25.1 16.8 -33.1 Assets 136.6 145.4 197.3 35.7 1 Intake Volumes (000's) 1,201 1,564 1,697 8.5 Sales Volumes (000's)1 1,185 1,471 1,679 14.1 1) Volumes represent total volumes recorded
Slide 34: Australia & New Zealand Metals
Australia & New Zealand Metals A$m 1H FY18 1H FY19 Chg % Sales Revenue 529.0 617.0 16.6 Statutory EBITDA 57.5 53.4 -7.1 Underlying EBITDA 58.9 59.5 1.0 Depreciation 14.6 15.6 6.8 Amortisation 0.1 0.0 -100.0 Statutory EBIT 42.8 37.8 -11.7 Underlying EBIT 44.2 43.9 -0.7 Assets 545.9 595.4 9.1 Intake V
Slide 35: Europe Metals
Europe Metals A$m 1H FY18 1H FY19 Chg % Sales Revenue 542.0 586.2 8.2 Statutory EBITDA 22.8 10.7 -53.1 Underlying EBITDA 17.8 8.8 -50.6 Depreciation 6.2 9.1 46.8 Amortisation 0.0 0.6 NMF Statutory EBIT 16.6 1.0 -94.0 Underlying EBIT 11.6 (0.9) -107.8 Assets 338.1 402.5 19.0 Intake Volumes (000's) 82
Slide 36: Global Trading
Global Trading A$m 1H FY18 1H FY19 Chg % Sales Revenue 324.4 342.4 5.5 Statutory EBITDA 3.1 10.6 241.9 Underlying EBITDA 5.6 11.9 112.5 Depreciation 0.1 0.1 0.0 Amortisation 0.0 0.0 NMF Statutory EBIT 3.0 10.5 250.0 Underlying EBIT 5.5 11.8 114.5 Assets 126.8 73.7 -41.9 Intake Volumes (000's) 712 67
Slide 37: Global E-Recycling
Global E-Recycling A$m 1H FY18 1H FY19 Chg % Sales Revenue 365.0 349.6 -4.2 Statutory EBITDA 11.6 11.6 - Underlying EBITDA 10.6 10.6 - Depreciation 4.1 4.3 4.9 Amortisation 0.0 0.0 NMF Statutory EBIT 7.5 7.3 -2.7 Underlying EBIT 6.5 6.3 -3.1 Assets 402.5 400.7 -0.4 Employees 1,451 1,445 -0.4 37
Slide 38: Corporate & Unallocated
Corporate & Unallocated A$m 1H FY18 1H FY19 Chg % Sales Revenue 39.2 37.9 -3.3 Statutory EBITDA (2.5) 4.0 260.0 Underlying EBITDA 1.9 5.1 168.4 Depreciation 4.5 5.4 20.0 Amortisation 0.0 0.0 NMF Statutory EBIT (7.0) (1.4) 80.0 Underlying EBIT (2.6) (0.3) 88.5 Assets 334.9 346.8 3.6 Employees 258 276
Slide 39: Financial Summary – Group
Financial Summary – Group A$m FY14 FY15 FY16 FY17 FY18 1H FY18 1H FY19 Group Results Sales Revenue 7,021 6,311 4,652 5,079 6,448 2,977 3,334 Underlying EBITDA 256 260 190 292 392 181 174 Underlying EBIT 138 139 64 180 275 125 110 Underlying NPAT 89 100 43 118 188 83 77 Underlying EPS (cents per shar
Slide 40: Financial Summary – Segment
Financial Summary – Segment A$m FY14 FY15 FY16 FY17 FY18 1H FY18 1H FY19 Sales Revenue North America Metals 3,358 2,916 1,943 1,984 2,607 1,177 1,401 ANZ Metals 1,194 1,053 744 981 1,071 529 617 Europe Metals 1,069 1,037 759 924 1,203 542 586 Global E-Recycling 760 795 793 727 758 365 350 Global Tra
Slide 41: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) A$m FY14 FY15 FY16 FY17 FY18 1H FY18 1H FY19 Proprietary sales tonnes (‘000)1 North America Metals 5,404 5,988 4,517 4,344 4,865 2,341 2,517 ANZ Metals 1,964 1,782 1,377 1,530 1,585 824 875 Europe Metals 1,599 1,583 1,350 1,589 1,691 810 792 Total 8,967 9,353 7,24
Slide 42: Financial Summary – Product
Financial Summary – Product A$m FY14 FY15 FY16 FY17 FY18 1H FY18 1H FY19 Sales tonnes (‘000) Ferrous Trading 9,331 8,325 6,768 7,009 7,708 3,749 3,963 Non Ferrous 566 539 476 454 432 226 221 Brokerage 1,918 1,617 1,307 1,237 1,716 786 767 Total 11,815 10,481 8,551 8,700 9,856 4,761 4,951 Sales Reven
Slide 43: Income Tax Expense - 1H FY19
Income Tax Expense - 1H FY19 A$m Profit Before Tax Income Tax Expense Effective Tax % Statutory Result 106.0 29.5 27.8 Impact of US state, local and trade taxes 0.7 0.7 Geographic composition of earnings 1.2 1.1 Normalised Results 27.6 26.0 43
Slide 44: Significant items by region – 1H FY19
Significant items by region – 1H FY19 NA ANZ Europe Global E- Global Investment Unallo- Pre-Tax After-Tax A$m Metals Metals Metals Recycling Trade in SAR cated Total Total Net benefit relating to lease - - (0.2) (1.0) - - - (1.2) (0.9) settlements / onerous leases Redundancies 0.2 (0.1) (0.2) - 0.3
Slide 45: Significant items by region – 1H FY18
Significant items by region – 1H FY18 NA ANZ Europe Global E- Global Investment Unallo- Pre-Tax After-Tax A$m Metals Metals Metals Recycling Trade in SAR cated Total Total Reversal of fixed asset - - - (0.6) - - - (0.6) (0.6) impairment Net benefit relating to lease - - (4.0) (0.4) - - - (4.4) (3.7)
Slide 46: Financial Summary – Excl. internal charge
Financial Summary – Excl. internal charge A$m FY14 FY15 FY16 FY17 FY18 1H FY18 1H FY19 Underlying EBIT (excluding internal recharges) North America Metals 24.0 28.0 21.2 70.5 104.7 49.7 55.3 ANZ Metals 90.5 70.8 48.7 73.8 96.9 50.1 51.8 Europe Metals 22.6 31.8 30.0 42.2 35.3 16.8 6.8 Global E-Recycl
Slide 47: Additional Information
Additional Information The US ports we typically ship materials from are: The UK Deep Sea ports we typically ship materials from are: - New York - Avonmouth - San Francisco - Sheerness - Los Angeles - Hull - Philadelphia - Newport - Providence - Belfast - Houston The UK Short Sea ports we typi