Sims Limited (SMSMY) Q2 2025 Earnings Call Transcript

2025-02-27 05:41:04 ET

Sims Limited (SMSMY)

Q2 2025 Results Conference Call

February 26, 2025 05:30 PM ET

Company Participants

Stephen Mikkelsen - Chief Executive Officer, Director & MD

Warrick Ranson - Chief Financial Officer

Rob Thompson - Chief Commercial Officer

John Glyde - Chief Operating Officer

Conference Call Participants

Daniel Kang - CLSA

Lee Power - UBS

Peter Steyn - Macquarie

Owen Birrell - RBC

Paul Young - Goldman Sachs

Ramoun Lazar - Jefferies

Andrew Scott - Morgan Stanley

Rohan Gallagher - Jarden Group

Chen Jiang - Bank of America

Brook Campbell-Crawford - Barrenjoey

Nicole Penny - Rimor Equity Research

Presentation

Stephen Mikkelsen

Thank you, and welcome, everyone, to our call. Today, we are here to present the half year results for FY '25. Presenting with me is Warrick Ranson, our CFO. Also on the call are Rob Thompson, our North American Metal President; and John Glyde, our ANZ Metal Managing Director. First up, I will run through our strategy and strategic priorities, market dynamics and overview of the results and operational highlights.

I'm also going to spend some time detailing the internal and external factors providing positive momentum for our business regions and divisions. Warrick will then take us through our recently formalized capital management framework and then a decent review of the financial results. At the end, I will return to talk about the outlook, after which we will have Q&A.

I will turn straight to Slide 5, which looks at our strategy and strategic priorities. At our FY '24 results announcement, I presented a similar version of the graphic on the left-hand side of the slide. This is effectively our plan on a page. Our purpose has endured for several years now, and our core strategy is to repurpose and recycle. We deliver this through the five elements of our strategy as detailed in the graphic. However, you can't deliver everything at once. We've had to focus on the strategic priorities that give us the biggest bang for our buck. We've simplified Sims by, amongst other things, reducing layers and increasing spans of control to speed up decision-making. There's been an enormous focus on increasing margins and not being preoccupied, particularly in NAM with marginal profit volumes.

We've continued to focus on shortening the cash cycle to improve our cash generation. The U.K. sale has been the most significant contributor to optimizing our portfolio. It has liberated management to focus on the U.S. and ANZ, where in many areas, we have a good market position. And in those where we don't, we have a pathway to a good market position. There could be some further acquisition and disposal opportunities within regions to further optimize the portfolio.

Maintaining or improving our market position will allow us to grow from a position of strength. On the buy side, we have been improving our supplier network to allow us to buy more unprocessed scrap at source. On the sales side, there has been a concerted effort to enhance our customer relationships, particularly domestic customers, and this has provided us with genuine domestic and export optionality to manage and capitalize on dynamic market conditions.

Part of this relationship building has also been about ensuring we have consistent and high-quality differentiated products to suit different market segments. The benefits of focusing on these strategic priorities are starting to show in our financials. But before we get to those, I would like to cover off-market prices and safety, beginning on Slide 6....

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