Sims (SGM) H2 2024 earnings summary

Executive summary

• Sales revenue increased 6.2% year-over-year to $8,562.7 million, driven by acquisitions and higher average metal sales prices, despite a 1.7% decline in sales volumes.

• Underlying EBIT fell 83.0% to $42.9 million, impacted by higher costs, asset reviews, and divestments; statutory NPAT was a loss of $57.8 million.

• SLS segment delivered over 100% EBIT growth year-over-year, expanding its customer base and benefiting from hyperscaler data center demand.

• NAM returned to profit in Q4 FY24, with improved performance in the second half, while UK Metals was divested.

• Cost reduction initiatives delivered $46 million in annualised savings, with 206 roles removed and further cost-out measures underway.

Financial highlights

• Underlying EBITDA declined 35.8% to $304.8 million; EBITDA margin dropped to 3.6%.

• Operating cash flow was $202.5 million, down 54.9% year-over-year.

• Net debt at year-end was approximately AUD 400 million; net cash position declined to $(411.9) million.

• Dividend per share reduced to 10.0 cents, down 71.4% year-over-year.

• Return on productive assets fell to 1.8% from 11.4% in FY23.

Outlook and guidance

• NAM's recovery is expected to continue, supported by agile, data-driven sales strategies, despite ongoing competition for scrap supply.

• SLS is positioned for further growth, leveraging AI-driven data center demand and positive market momentum.

• Global steel demand remains muted, with persistent inflation and Chinese steel exports weighing on the market.

• Further cost reduction efforts and proceeds from asset sales are planned to strengthen the balance sheet and support targeted growth.

• Zorba prices anticipated to remain strong, driven by energy transition and decarbonisation trends.