Metals recycling giant Sims has announced a significant drop in its dividend after recording a full-year loss, citing challenging conditions in the global scrap metal export market.
The company reported a net loss of £37.3 million for the year ending June, a dramatic shift from the £117.1 million profit achieved in the previous year. This figure also fell short of market expectations.
In response to the disappointing results, Sims slashed its final dividend to 10 pence per share, representing a 52% reduction compared to the previous year. Despite the loss, the company's revenue climbed by 8.4% to £4.6 billion.
Sims' shares opened trading on the ASX with a 1% rise, reaching £7.20.
The company's CEO, Stephen Mikkelsen, acknowledged the challenging market conditions that impacted the metals business throughout the year. While the North American Metal unit exhibited an improved performance during the second half, it was partially offset by competitive pressures within the ANZ Metal operations.
This challenging environment resulted in a significant 83% decline in underlying earnings, reaching £27.8 million. The company had previously forewarned of lower earnings for the second half in May, highlighting the ongoing difficulties in the scrap metal market. Earlier this month, Sims divested its UK recycling business and stake in another company for £282 million.
Owen Birrell, an analyst at RBC Capital Markets, remarked that the company's second-half earnings surpassed previous guidance, despite the subdued outlook. Birrell attributed this subdued outlook to the persistent challenges within the scrap metal markets.
