Sims Metal Management (ASX: SGM) suffers heavy falls
Stock
Sims Metal Management (ASX:SGM) $9.32 as at 21/01/2019
Event
Recycled metals company Sims Metal Management (ASX: SGM) has been whacked on an earnings update the company released to the market this morning. The stock is trading at 2 year lows after falling nearly -15% today.
The company announced expected EBIT for the first half of FY19 at around $110m which compares to a 1H18 figure of $125m or a 12.2% fall on the previous comparable period (pcp).
Much of the soft result has been driven by poor European trading conditions which has resulted in an 88% fall in the company’s EBIT generation from the region.
Potentially even more concerning for the company is not the poor trading for the 6 months just gone, but the outlook for the remainder of the year.
Consensus EBIT for the 2019 Financial Year is currently at $271.6m, with current operating run rate landing at $220m for the year, this is -18% short of expectations. Over FY18, EBIT was split 45/55 first half vs second. If this trend continues, FY19 EBIT will be ~$244m, or still 10% short of the markets current forecast.
The CEO & MD Alistair Field noted that “the first half has been challenging for all recycling companies globally and will continue to be so for the near future…I am confident that our strategy of producing high quality products that better meet the needs of our customers is key to our long term success.” Not a very promising outlook for the current shareholder.
