Sims, a metal recycling company, is considering acquiring smaller scrapyard businesses, many of which are owned by individuals in their 70s whose children are not interested in taking over the operations. Sims is an Australian based company that purchases ferrous and non-ferrous recycled metals from businesses, manufacturers, and the general public, processing them into new commodities. The company facilitates the collection, processing, and sale of these recycled materials.
Chief Executive Officer Stephen Mikkelsen informed investors that the company plans to take a disciplined and surgical approach to these acquisitions. He noted that opportunities are emerging as the scrap metal industry increasingly focuses on domestic markets. Succession challenges are becoming a significant concern for these private owners.
Mikkelsen pointed out that governments globally are placing greater emphasis on supporting local steel industries. This is driving increased demand for steel scrap for electric arc furnace mills, particularly in the United States. He observed a trend towards strengthening domestic steel production capabilities.
RBC Capital Markets analyst Owen Birrell noted that export markets and the Australasian business continue to be affected by record-high Chinese steel exports, which are suppressing demand for ferrous scrap. RBC has set a 12-month share price target for Sims at $20.50.
