Sims (ASX:SGM) earnings hit by scrap price crash

Sims Metal Management (ASX:SGM) has flagged expectations of an underlying first-half loss before interest and tax of around $20 million to $30 million.

The company says the first half will be hit by the fallout from the scrap price crash will be worse than originally anticipated.

Sims says three main issues have contributed to the loss. Firstly the collapse in the sell price for ferrous scrap.Secondly unsold inventory leading into September which will be sold at a loss and will impact the company's results through to December. And, finally a decline in he buy price to potentially below the level at which it is economic for a number of Sim’s suppliers to gather and sell scrap.

Looking forward the company expects to move into profit for the full year with expected earnings of between FY20 EBIT of between $20 million and $50 million.

Shares in Sims Metal Management (ASX:SGM) have fallen by 21 per cent over the past 12 months. On Friday shares in the company closed  13.3 per cent lower at $8.75.

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Source: Finance News Network