Sims Ltd. · ASX:SGM
Sims — Sims Metal Management — Investor Presentation (May 2014)
42 slides from Sims's investor presentation, May 1, 2014
Slide 1: Analyst and Investor Site Tour – North America Metals
For personal use only Claremont Terminal, Jersey City – Metals Recycling Sims Metal Management Analyst and Investor Site Tour North America Metals – New England & East Regions April 30 & May 1, 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 Sims Metal Management North America Overview Economic Update & Key Earnings Drivers US Metals Recycling Overview & Competitive Landscape Global Markets & Trading Summary 3
Slide 4: North America Reporting Segment
North America Reporting Segment For personal use only Sims Metal Management North America North America North America Metals Recycling SRS North America Revenue ~85 facilities & 10 deep water FY13 (A$m) North America Metals export docks across 20 states 273 50% JV with Adams Steel SA Recycling ~50 f
Slide 5: North America Metals
North America Metals For personal use only Bob Kelman President North America Metals NAM East NAM New England NY, NJ, and PA CT, RI, and MA NAM Southeast NAM West VA and NC CA, NV, UT, and BC NAM Central NAM South IL, IN, MI and OH TN, AR, and MS NAM Southwest Bulk Stainless TX and OK NJ, IL, and AR
Slide 6: North America Metals Footprint
North America Metals Footprint For personal use only WA ME VT MT ND MN NY NH OR MA ID SD WI MI RI WY CT PA CA IA NJ NV NB OH IL IN MD DE UT WV VA CO KS MO KY NC North America1 (FY13) TN Sales Revenue A$4,535m AZ NM OK AR SC EBITDA (statutory) A$46m AL GA MS EBITDA (underlying) A$104m LA EBIT (statut
Slide 7: Development of North America Metals
Development of North America Metals For personal use only 1998: Entered the Jul & Aug-13: Jun-07: Formed 50% Jul-09: Acquired US metals recycling Divested non-core JV with Adams Steel Fairless Iron & Metal, market through the metals recycling to create SA Recycling a full service metal acquisition o
Slide 8: Currently the smallest earnings contributor
Currently the smallest earnings contributor For personal use only EBIT by Region EBIT by Region FY08 HY14 10% 13% 17% Peak to present earnings 29% 58% 73% North America Australasia Europe North America Australasia Europe North America is currently the smallest earnings contributor, and represents th
Slide 9: Agenda
Agenda For personal use only Sims Metal Management North America Overview Economic Update & Key Earnings Drivers US Metals Recycling Overview & Competitive Landscape Global Markets & Trading Summary 9
Slide 10: Economic Update
Economic Update For personal use only Continued weak metal scrapping rates and poor material mix are the key issues Per capita total ferrous scrap generation below long-term average Relative total industry processed tonnage has improved, but mix is poor Vehicle & Appliance scrap generation per capit
Slide 11: Total scrap metal generation still low
Total scrap metal generation still low For personal use only Total US ferrous scrap generation Higher recycling rates, as a percentage of 120 Mt 120% discarded scrap metal, have supported Ferrous scrap processed processed ferrous scrap volumes Ferrous scrap landfilled 100 100% Recycling rate (RHS) T
Slide 12: Material flows for shredding inadequate
Material flows for shredding inadequate For personal use only Auto & Appliance as % of total scrap Consumer Confidence (RHS) 35% 160 140 30% 120 25% 100 80 20% 60 40 15% 20 10% 0 Historically low consumer confidence suppressing auto & appliance disposal volumes Source: Polk, AHAM, USGS, Conference B
Slide 13: Consumer scrap generation near yr lows
Consumer scrap generation near 15 yr lows For personal use only Vehicles & Appliances 2008-09 recession had significant impact on ferrous scrap metal generation 65 kg per capita the consumer goods replacement cycle Continued low consumer confidence High unemployment, low labour participation, 60 and
Slide 14: Low scrapping lifting average vehicle age
Low scrapping lifting average vehicle age For personal use only Rising age of vehicles 130 55% 120 Number of vehicles over 11 years old 50% up 21% since 2008 US vehicles in use (millions) % of total vehicles in use 110 45% 100 90 40% Over 120 million vehicles over 11 years old 80 74% of all vehicles
Slide 15: US household appliances also aging
US household appliances also aging For personal use only Average age of Household Appliances 5.5 5.4 Average age of household appliances now the highest in 70 years 5.3 5.2 5.1 years 5.0 Life expectancy of household appliances Dishwashers 9 years 4.9 Dryers 13 years 4.8 Freezers 11 years Range (elec
Slide 16: As well as non-residential fixed assets
As well as non-residential fixed assets For personal use only Average age of Government Fixed Assets Government fixed asset infrastructure 26 20 advancing in age and will require renewal in 26 coming years 25 19 Private non-residential fixed asset aging had 25 also increased since 2008, as capital 2
Slide 17: Improving leading indicators encouraging
Improving leading indicators encouraging For personal use only 160 Consumer Confidence 140 Consumer confidence rising, but remains 120 long-term avg below long-term levels 100 80 60 Vehicle scrapping historically follows at a lag 40 to new vehicle sales 20 0 US new home sales and appliance shipments
Slide 18: Agenda
Agenda For personal use only Sims Metal Management North America Overview Economic Update & Key Earnings Drivers US Metals Recycling Overview & Competitive Landscape Global Markets & Trading Summary 18
Slide 19: World's largest source of scrap supply
World’s largest source of scrap supply For personal use only US processed scrap by commodity Global ferrous scrap processed 80 2012 2012 70.0 70 70Mt 60 Largest scrap market in the world 50 ~20% of global ferrous scrap Million tonnes 40 30 20 300Mt 10 5.5 United States 2.0 Rest Of World 0 Ferrous (S
Slide 20: US metals recycling industry footprint
US metals recycling industry footprint For personal use only US Metals Recycling Industry Footprint US Metals Recycling Market Share Sims North America 14% Steel Dynamics / Omnisource 9% Other 49% Schnitzer 7% DJJ 5% Ferrous Processing & Trading Metalico CMC 4% 1% Processors 3% Alter PSC Metals Trad
Slide 21: Ferrous sources of supply
Ferrous sources of supply For personal use only Key sources of ferrous scrap supply Steel Cans Post Industrial % Stainless Railroad Steel Motor rails Stampings & clippings 12-14% blocks Post Borings & turnings 3-5% Other Steel Industrial Scrap Other 1-3% Other light Total ~20% iron Obsolete Material
Slide 22: Ferrous processing and processed grades
Ferrous processing and processed grades For personal use only Unprocessed Supply Processing Method Processed Grades Post Industrial Stampings & clippings #1 and #2 Busheling Baling & Bundling Borings & turnings #1 and #2 Bundles Obsolete Material Passenger vehicles Major appliances Shredding Shredde
Slide 23: Processed ferrous grades and prices
Processed ferrous grades and prices For personal use only Key ferrous scrap grades Ferrous scrap prices % of production 600 US$/t Stainless Other Steel 14% 500 2% Turnings, Turnings & Shredded 400 Boring, Borings 33% Punch 6% 6% 300 Cut Plate & Structural & Structural Plate 200 7% 7% 100 Bundles & B
Slide 24: Industry shredding capacity slowly declining
Industry shredding capacity slowly declining For personal use only 60 Shredding capacity year-on-year change 20% Million gross tonnes per annum1 in total capacity 50 15% 40 10% 30 5% 20 0% 10 -5% 0 -10% Total Capacity YoY Change (RHS) Shredder capacity rationalisation just beginning 1) Shredding cap
Slide 25: Agenda
Agenda For personal use only Sims Metal Management North America Overview Economic Update & Key Earnings Drivers US Metals Recycling Overview & Competitive Landscape Global Markets & Trading Summary 25
Slide 26: Global trade in ferrous scrap metal
Global trade in ferrous scrap metal For personal use only Global Ferrous Exports by Country Global Ferrous Imports by Country 2012 (Mt) 2012 (Mt) United States 21.4 Turkey 22.4 Other Other 31.2 31.2 Japan 8.6 South Korea 10.1 Australia 2.2 United Germany States Belgium 8.9 3.7 India 3.5 Belgium 8.1
Slide 27: Global trading of ferrous scrap
Global trading of ferrous scrap For personal use only Sims Metal Management Metals Recycling Operations Key Export Market Global Trade Office 27
Slide 28: Agenda
Agenda For personal use only Sims Metal Management North America Overview Economic Update & Key Earnings Drivers US Metals Recycling Overview & Competitive Landscape Global Markets & Trading Summary 28
Slide 29: Summary
Summary For personal use only The US metals recycling industry has faced challenges before Highly cyclical industry with booms, busts, and recoveries – last downturn in late 1990’s North America currently the smallest earnings contributor, but with the largest upside Low material generation and poor
Slide 30: Johnston, RI – Metals Recycling, New England Region
For personal use only Johnston, RI – Metals Recycling Sims Metal Management North America Metals - New England Region April 30, 2014
Slide 31: Safety Overview
Safety Overview For personal use only 4.5 Safety 4.0 3.5 Incident rates for the New England based 3.0 facilities have consistently been lower than 2.5 North America Metals as a whole since its 2.0 inception 1.5 Rates continue to stay low despite regional 1.0 growth and integrating new employees into
Slide 32: New England Metals Recycling Footprint
New England Metals Recycling Footprint For personal use only Located in the densely populated scrap generating North East, encompassing large metropolitan regions of Boston MA, Providence RI, and Hartford CT Total catchment area of over 12 million people, and GDP of over US$680 billion per annum, ac
Slide 33: Johnston, Rhode Island
Johnston, Rhode Island For personal use only Commenced operations in December 2013 Operates a large mega shredder 10 acre site optimised for inbound and outbound logistics and material handling Strategically located on major I-295 highway outside Providence RI, and less than 50 miles from Boston and
Slide 34: Providence, Rhode Island
Providence, Rhode Island For personal use only Providence – Fields Point Commenced operations in August 2013 7.5 acre feeder yard with non-ferrous processing, baling, 60,000 sq ft warehouse with loading docks as well as wet car detox Excellent transport logistics including rail access Fields Point,
Slide 35: North Haven, Connecticut
North Haven, Connecticut For personal use only Acquired in 1998 by Metals Management Purchases and processes industrial and obsolete ferrous & non-ferrous scrap metal and equipped with a mid-sized shredder, shear, torch cutters and wet car detox station Operates downstream MRP recovery plant Rail se
Slide 36: Summary
Summary For personal use only Expanding processing and exporting footprint for the North America Metals business Situated in densely populated and high scrap generating North East, encompassing large metropolitan regions of Boston MA, Providence RI, and Hartford CT Strategic flexibility to service b
Slide 37: Claremont Terminal, Jersey City – East Region
For personal use only Claremont Terminal, Jersey City – Metals Recycling Sims Metal Management North America Metals – East Region May 1, 2014
Slide 38: Safety Overview
Safety Overview For personal use only 4.5 Safety 4.0 3.5 Maintaining a ‘zero harm’ working environment 3.0 is a core value for Sims Metal Management 2.5 2013 was a difficult year as we dealt with a one 2.0 serious injury that pushed the RR and LTR up 1.5 significantly from previous years 1.0 The reg
Slide 39: East Region Metals Recycling Footprint
East Region Metals Recycling Footprint For personal use only Located in the densely populated US east coast encompassing the cities of New York NY, Newark-Jersey City NJ, and Philadelphia PA Total catchment area of over 30 million people, and a GDP of US$1,700 billion per annum, across the greater N
Slide 40: Claremont Terminal, Jersey City NJ
Claremont Terminal, Jersey City NJ For personal use only Largest full service facility in the North America Metals portfolio, equipped with a large shredder, baler, shears, torch cutters, and wet car detox station Downstream MRP recovery system Strategically positioned near main transport arteries,
Slide 41: Fairless, Morrisville PA
Fairless, Morrisville PA For personal use only Acquired in 2009 Equipped with a large shredder, shears, torch cutters, and wet car detox station Downstream MRP recovery system Deep water export dock Supported by network of 5 feeder yards and strong dealer supplier relationships Total catchment area
Slide 42: Summary
Summary For personal use only Leading market share in the densely populated and high scrap generating US East Coast, encompassing the largest urban metropolitan areas in the United States including New York City NY, Newark-Jersey City NJ, and Philadelphia PA Highly complementary eco-system of feeder
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