Sims Metal makes another big loss

THE world's largest recycler, Sims Metal, has made another massive loss following a sharp fall in revenues and writedowns to its US and UK businesses.

Australian-listed Sims made a net loss of $466 million for the 2012/13 financial year, but it was an improvement on the $622.5 million loss the company made the previous year.

The result was dragged down by a $292 million goodwill impairment, mostly relating to the weak performance of its US business.

It was also affected by a $64 million inventory writedown in its UK operations following an alleged fraud.

The company also saw its underlying profit decline - down 77 per cent to $17 million - primarily due to weakness in its European businesses, where earnings fell 88 per cent over the year.

Globally, the group's revenue dropped from just over $9 billion in 2011/12 to $7.2 billion last financial year due to lower sales and reduced prices for scrap metals.

But the company said its US business had lifted its earnings during the past 12 months, despite the impairment charge, and had seen some increase in scrap metal prices since the start of the current financial year.

"Underlying fundamentals for scrap generation have shown steady improvement in the US," the company said in a statement on Friday.

Sims said it had reduced costs across the group by nearly $45 million during the year and it was targeting further reductions this year.

"The company remains focused on business factors most within its control; including maximising gross margin through careful management of the trade-off between intake pricing and volumes, attention to capacity utilisation, and operational cost reductions," it said.

Sims currently is without a chief executive following the retirement of Daniel Dienst on June 30.

It expects to announce an appointment by the end of September.

Sims shares jumped 54 cents, or 6.06 per cent, to $9.45 following the release of the profit result.

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