Sims (ASX:SGM) earnings soar on higher sales & material prices

Company News

by Lauren Evans

Sims (ASX:SGM) has delivered earnings above guidance for the half year ending December last year, driven by increased sales and material prices.

The metal-recycling company reported sales revenue of $4,265 million, up 73.9 per cent from the prior corresponding period, while underlying earnings before interest and taxes rose 541.3 per cent to $361.7 million.

Its trading margin increased by 45 per cent, but operating costs rose due to higher activity across the business, acquisitions and greenfield facilities, increased group performance incentive provisioning, and inflationary pressures.

The company's underlying net profit after tax reached $269.3 million for the half, a 622 per cent improvement from the year before.

Sims will distribute $135 million in cash payments and declare a 41 cents per share dividend. The company also said $54 million is allocated for a share buyback programme to be completed in the second half of the financial year. 

“We delivered an excellent performance in HY22 with earnings above guidance, driven by growth in trading margin, against a backdrop of volatile freight markets and inflationary pressures,” said chief executive officer Alistair Field.

"We significantly improved our operating cash flow from 2H FY21, increased cash returns to shareholders, and maintained the strength of our balance sheet. Intake volumes grew strongly and were close to pre-covid levels, highlighting the continued strength of our metal businesses”.

Shares in Sims (ASX:SGM) are trading 16.7 per cent higher at $17.50 

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