Sims Metals swings to H1 profit

Group says exit of Toyota, General Motors provides opportunity for investment.

Sims Metal Management (SGM) says the flow-on effects of the exit of General Motors and Toyota from the Australian manufacturing industry will provide it with an opportunity for greater investment after swinging back to a first-half profit.

In the six months to December 31, Sims posted a net profit of $9.3 million, a 103%per cent lift on $296.1 million loss the recorded in the previous corresponding period.

However, the group noted that the previous corresponding period included a $291.3 million impairment charge, while the current period included no such charges.

In the half year, revenue was $3.601 billion, a 4.9% lift on the $3.434 billion posted in the first half of the previous year.

The group declined to pay an interim dividend, due to the absence of "meaningful" net profit.  

Transpacific said its dividend policy to distribute 45% to 55% of net profit after tax (NPAT), subject to the board’s discretion, remains unchanged.

Transpacific noted investment in the mining sector in Australia is showing early signs of decline, and in addition with the exits of General Motors and Toyota from the manufacturing industry has led to a slowing of GDP growth.

"Within this challenging environment, several metal recycling competitors have either left markets or scaled back operations," the group said.

"These developments have created the opportunity for in vestment in a new shredding operation in Western Australia, which we expect to become operational in the second half of fiscal 2015."