Sims Metal Management Limited (SGM)
F4Q2010 Earnings Call Transcript
August 26, 2010 7:00 pm ET
Dan Dienst – Group CEO
Rob Larry – Group CFO
Andrew Gibson – Goldman Sachs
Ben Wilson – JP Morgan
Todd Scott – RBS
Scott Hudson – CLSA
Michael Slifirski – Credit Suisse
Emily Behncke – Deutsche Bank
Sophie Spartalis – Macquarie
Brent Thielman – D.A. Davidson
Tony Mitchell – Ord Minnett
Eric Prouty – Canaccord
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Good morning ladies and gentlemen, and welcome to the fiscal year 2010 full-year results conference call for Sims Metal Management. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator instructions) I must advise you that this conference is being recorded today, Thursday, 26
of August, 2010 in United States and Friday, 27
of August, 2010 in Australia, Asia and Europe.
Today’s presentation may contain forward-looking statements, including statements about Sims Metal Management Limited’s financial condition, results of operations, earnings outlook and prospects. Because these forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those experienced or implied by these forward-looking statements.
Investors are encouraged to review the filings made by Sims Metal Management Limited with the Securities and Exchange Commission including its Form 20-F/A, which we filed with the SEC on the 14th of April, 2010, which describes some of the factors that may cause actual results to differ from these forward-looking statements.
I would now like to hand the conference over to your speaker today, Mr. Dan Dienst, Sims Metal Management Group Chief Executive Officer. Please go ahead, sir.
Thank you Joel. Good morning, good evening and welcome everyone to today’s call. It’s great to be here in beautiful but chilly Sydney and we appreciate you joining us for this preview of our results for the fiscal year ended 30
June, 2010. Joining me as usual would be Rob Larry, our Group Chief Financial Officer.
Our call this morning will follow the usual format that we have used in the past. First, I will provide some initial thoughts before turning the call over to Rob who will provide some details on our financial results. Then I will make some closing remarks on market conditions before we take some Q&A as time permits.
As always, we would like to start by welcoming the best and the brightest in the metals and electronics recycling industry. All of the men and women of Sims Metal Management and partners that are joint ventures across the world, many of whom are listening to today’s call and webcast. We would like to thank our employees for another hard-fought year in what again were trying times. Your hard work and perseverance is an inspiration and we thank you.
I spent most of August travelling to some of our facilities around the world on a safety tour. And of all of our accomplishments in fiscal ’10, which included significantly higher statutory earnings as evidenced by a 36% increase in EBITDA and a AUS$277 million year-on-year increase in net profit after-tax, we are perhaps most proud of our progress on safety. We worked safer in fiscal ’10 than fiscal ’09, evidenced by fewer workplace injuries and reduced severity and are continuing on the journey of not just creating the safest company in recycling business, but a company that can stand shoulder-to-shoulder with the safest manufacturing companies in the world. We are safer and best in the business, but I must remind our employees that we have ways to go. We must and can and will be better. Do not let up.
Before I turn the call over to Rob to go over the financials, allow me to make a few observations about fiscal ’10, now that it has been put in the books and then share a little bit about what we are seeing out there. We noted improvement in many of our markets in fiscal ’10, especially when considered in the context of the extraordinary carnage encountered in fiscal 2009. While the GFC abated, we nonetheless faced significant challenges as major western economies attempted to navigate from crisis to recession to recovery. Our non-ferrous metals business achieved healthy margins and strong year-on-year growth, confirmation of a core competency as we buy locally and market globally these metals.
Ferrous margins and scrap flows outside Australia continued to be disappointing relative to longer-term expectations, particularly in North America where the U.S. economy struggled and continues to struggle to find its footing. As you look back across fiscal 2010, ferrous markets improved in our first fiscal quarter and again in March and April, but the uncertainty surrounding European sovereign debt and other perceived threats to global economic growth and recovery resulted in weak and, in some cases, non-existent demand for ferrous scrap in our fourth fiscal quarter. Notwithstanding these challenges, our Australian and European businesses performed well.
Our electronics recycling business, SRS, bounced back from fiscal 2009 and outperformed our own lofty expectations in fiscal ’10. For a little historical context, fiscal 2008 was a ferrous story, fiscal 2009 was a GFC-induced story of misery and pain and fiscal 2010 was a non-ferrous and SRS story. Despite the macroeconomic challenges in fiscal 2010, Sims Metal Management finished the year operationally and financially stronger. Our strong financial foundation allows the continued investment in technology, while simultaneously pursuing external growth opportunities.
We are confident that our commitment to operational excellence, especially as it concerns the safety and well-being of our valued employees, will allow us to continue to improve our efficiency and profitability, further solidify our leadership position in the industry and maintain and enhance our sustainable competitive advantage.