Sims Ltd. · ASX:SGM
Sims — Sims Metal Management — Investor Presentation (July 2014)
36 slides from Sims's investor presentation, Jul 23, 2014
Slide 1: Sims Metal Management Strategic Review
For personal use only Sims Metal Management Strategic Review Galdino Claro, Group CEO 23 July 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 Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 3
Slide 4: A clear five-year strategic plan
A clear five-year strategic plan For personal use only Grow Optimise • Organic market share growth and feeder yard network expansion • Selective acquisitive growth Streamline • Strengthen supplier relationships • Return to growth in Global SRS with asset management and • Exploit local & global logis
Slide 5: Ambitious & realistic earnings growth pathway
Ambitious & realistic earnings growth pathway For personal use only EBIT Growth Pathway 5 year plan to grow EBIT over 350% 350 A$m through internal initiatives alone 300 Streamline 250 Return to core strengths Optimise 200 Realign to core drivers of profitability Grow 150 Primary focus on organic gr
Slide 6: And initial results have been encouraging
And initial results have been encouraging For personal use only Initial results in test region High tripled margins during FY14 Optimise Wide disparities in profitability across global Metals Recycling operations Sales revenue Exited businesses outside the long-term interests of the Company Focusing
Slide 7: Experienced team aligned for delivery
Experienced team aligned for delivery For personal use only Galdino Claro Group CEO & Managing Director North America North America North America Australasia Europe Global Metals Metals Metals Metals Metals SRS West Central East Global Trade Steve Shinn Galdino Claro Joe Payesko Bill Schmiedel Darro
Slide 8: Agenda
Agenda For personal use only Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 8
Slide 9: Streamlining the Business
Streamlining the Business For personal use only Streamlining expected to deliver annual benefits of A$32m 50% to be realised in FY15, and 100% in FY16 Annual Benefit Business Actions EBIT (A$m) North America Metals Consolidating 7 operating regions to 3 (West, Central, and East) North America Metals
Slide 10: North America Metals: Lower overhead and increased operational focus
North America Metals: Lower overhead and increased operational focus For personal use only West Region Central Region East Region 7 sub-regions consolidated into 3 Reducing regional overhead costs Allocating capital to most profitable and NY MI MA sustainable operations CT RI CA OH PA NV IL IN NJ Di
Slide 11: North America Metals: Re-aligning to address unique regional conditions
North America Metals: Re-aligning to address unique regional conditions For personal use only West Region Central Region East Region 66 facilities 27 facilities 33 facilities 8 shredders (including JV’s) 3 shredders 6 shredders 4 deep water docks 6 brown water docks 7 deep water docks Regional Profi
Slide 12: Electronics Recycling (SRS): Footprint streamlined to core profitable operations
Electronics Recycling (SRS): Footprint streamlined to core profitable operations For personal use only Exited non-strategic and loss making High facilities in FY14 and consolidated sites Long-term strategic attractiveness Other APAC Remaining portfolio of businesses achieve Other Europe Germany high
Slide 13: Electronics Recycling (SRS): Portfolio streamlined into two primary business lines
Electronics Recycling (SRS): Portfolio streamlined into two primary business lines For personal use only Asset WEEE Other Management Recycling Asset Management North America B2B focused business with global footprint United States Canada and best in class operating certifications Australasia Austral
Slide 14: Agenda
Agenda For personal use only Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 14
Slide 15: Metals Recycling: Optimising the core drivers of profitability
Metals Recycling: Optimising the core drivers of profitability For personal use only Supplier Buy the right quality for the right price Reinforce feeder yard networks Relationships Strengthen supplier relationships Optimise transport capabilities Logistics Minimise freight & handling cost Leverage e
Slide 16: Supplier Relationships: Buying the right quality for the right price
Supplier Relationships: Buying the right quality for the right price For personal use only Case Study: Profitability reporting by supplier introduced in test region achieved impressive resultsM Test Region: Top 25 Suppliers Test Region: Top 25 Suppliers July 2013 May 2014 High High EBIT/t EBIT/t $0/
Slide 17: Logistics: Maximising transport capabilities
Logistics: Maximising transport capabilities For personal use only Case Study: New York / New Jersey Metro Area Well engineered network of suppliers and feeder- yards required to ensure the natural flow of BRONX material is steered towards our facilities Having both export and domestic market flexib
Slide 18: Logistics: Leveraging new reporting tools to lower freight costs
Logistics: Leveraging new reporting tools to lower freight costs For personal use only Freight expenses for the Group was A$560 million in FY13, equal to 8% of total sales revenue North America Metals inbound trucking costs Case Study: North America Metals, trucking costs 50 US$/t 100 Gross Internal
Slide 19: Operational Excellence: Driving continuous improvement & lifting yields
Operational Excellence: Driving continuous improvement & lifting yields For personal use only We are focused on bringing best practices to all our 250 facilities around the world Case Study: Kwinana, Western Australia Kwinana is the final stage of our shredder replacement program and off-line downst
Slide 20: Operational Excellence: Focused on talent development and retention
Operational Excellence: Focused on talent development and retention For personal use only Case Study: Australasia cadet / graduate program People & Culture Attracting, developing, and retaining talented staff is critical for long-term success Talent development, from cadets to managers, is our most
Slide 21: Product Quality & Service: Developing new value added products
Product Quality & Service: Developing new value added products For personal use only Industry specifications need to adapt to customer needs Ferrous scrap product specifications have not materially changed for over 60 years Steel making industry had evolved requiring new targeted products Each steel
Slide 22: Product Quality & Service: Taking the lead on product quality
Product Quality & Service: Taking the lead on product quality For personal use only Ferrous Scrap Types Heavy Melt Steel (HMS) Shredded Busheling Plate & Structural 22
Slide 23: Product Quality & Service: Our scale provides flexibility to service all customers
Product Quality & Service: Our scale provides flexibility to service all customers For personal use only Both bulk shipping needs> >or containerised 23
Slide 24: Product Quality & Service: Leveraging global network to reach new markets
Product Quality & Service: Leveraging global network to reach new markets For personal use only Global supply and customer network Sims Metal Management Metals Recycling Operations Key Export Market Global Trade Office 24
Slide 25: Agenda
Agenda For personal use only Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 25
Slide 26: Electronics Recycling (SRS): Reset to address changed competitive landscape
Electronics Recycling (SRS): Reset to address changed competitive landscape For personal use only Past Present Future Industry Timeline SRS Streamline 1990-2000 B2B focused industry with metal Mega-plant strategy is over Integrate global network of rich material & healthy margins acquired operations
Slide 27: Electronics Recycling (SRS): A clear plan for earnings recovery and growth
Electronics Recycling (SRS): A clear plan for earnings recovery and growth For personal use only Substantially Complete Primary Focus Ongoing * Decision made to exit non- * Improve supply control and * Continued growth in asset Streamline strategic and loss making purchasing management, and manageme
Slide 28: Electronics Recycling (SRS): Leveraging customer relationships
Electronics Recycling (SRS): Leveraging customer relationships For personal use only Case Study: Using mobile data destruction to grow revenues with less capital intensity We expect value-added services to become a significant component of future revenue and EBIT Data security is an increasing prior
Slide 29: Agenda
Agenda For personal use only Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 29
Slide 30: Attractive opportunities for growth: Metals Recycling
Attractive opportunities for growth: Metals Recycling For personal use only Organic growth in existing core markets Strategic feeder yard expansion to secure volumes and improve source control Strengthen supplier relationships to lift regional market share Operational footprint enhancements Investig
Slide 31: Attractive opportunities for growth: Electronics Recycling (SRS)
Attractive opportunities for growth: Electronics Recycling (SRS) For personal use only Continue growth in Asset Management Leverage global footprint with international client base Grow services and revenue sharing as a portion of total SRS revenues Expand mobile device repair, re-use, and re-sale Gr
Slide 32: Agenda
Agenda For personal use only Strategy Overview Streamline Optimise Metals Recycling Electronics Recycling (SRS) Grow Summary 32
Slide 33: A clear five-year strategic plan
A clear five-year strategic plan For personal use only Grow Optimise • Organic market share growth and feeder yard network expansion • Selective acquisitive growth Streamline • Strengthen supplier relationships • Return to growth in Global SRS with asset management and • Exploit local & global logis
Slide 34: Strategic Review Appendix
For personal use only Strategic Review Appendix July 23, 2014
Slide 35: Restructuring Charges
Restructuring Charges1 For personal use only Strategic review has identified a number of Estimated Region Actions Impairment non-core and under-performing operations ($Am) outside the Company’s strategic long-term North America Metals Recycling interests Write-down of Gulf Region Sims Recycling Solu
Slide 36: Global Recycling Operations
Global Recycling Operations For personal use only Europe Sales tonnes: 1.6Mt (FY13) Metals Recycling: ~35 facilities, 3 shredders, & 3 deep water export docks Electronics Recycling: 12 facilities** North America Sales tonnes: 9.4Mt (FY13) Metals Recycling: ~70 facilities, 10 shredders, & 14 deep wat
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