Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Australia headquartered metal recycler, Sims, raised its full-year earnings forecast on rising scrap intake levels along with growing scrap prices.


The company is expecting its underlying earnings before interest and taxes (EBIT) for fiscal 2021 ending Jun 30 to range from $360-380mn. This indicates a rise of 22-38pc or at minimum, $50mn and as much as $120mn versus the company’s prior outlook range of $260-310mn provided on Apr 19.


The scrap processor anticipates it will maintain strong Q3 results extending into Q4 and confirmed market conditions expressed in April are ongoing. In particular, H2 2021 scrap intake volumes have stayed near 95pc of 2019’s average monthly levels against 85pc in H1 2021.


Sims also noted an overall improvement in gross margin per ton, owed to rising scrap prices and strategic margin management. Moreover, a large contribution from SA Recycling led by soaring scrap prices, specifically for shredded metals such as zorba, firm intake volumes, and margin management processes are keeping the forecast strong.


In April, the company, concerned over rapidly growing prices which began climbing in December 2020, provided strong EBIT that would not be upheld in Q4. However, Sims cites this has not occurred and Q4 will likely be as robust as the previous quarter.


Any lingering risks that may potentially hinder the company from reaching its estimated fiscal 2021 results entail fulfilling assumed June shipping plans, in light of ongoing global shipping concerns.

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