Steel Market Update (SMU) reviewed both the earnings release as well as a transcript of the SIMS conference call with analysts held this past week.

Sims Metal Management released their 4th quarter earnings reporting the second half of fiscal 2011 will be more stable and positive than the first half 2011. Scrap volumes and margins as well as shipments increased. Total sales revenue for fiscal 2011 was $8.9 billion, up 19% from FY 2010. Compared to the previous year, the Company's scrap intake and shipments increased 7% and 10% to 14.3 million tons and 14.2 million tons, respectively. The fourth quarter 2011 reported scrap intake and shipments increased 3% and 15% at 3.7 million tons and 4.2 million tons, respectively from 4Q10.

For North America, revenue was up 19% from FY 2010 to $6 billion, scrap intake increased 9% to 11.1 million tons, and shipments increased 11% to 11.0 million tons. For the 4th quarter 2011, North America’s scrap intake increased 1% to 2.9 million tons compared to 4Q10.

For North America, the Company said, “we'll continue to build out the New York City material recycling facility in Brooklyn, New York, which will become the main processing hub for all of New York City's curbside recyclables. And we will additional investments into non-ferrous recovery and contract greenfield expansion projects.”

Daniel W. Dienst, commented that the Company may grow inventories slightly but still at a liquid pace, saying, “Our current base of inventory directionally will probably put us at an 11, 12-time turn, which is historically where we like to be.”

Mr. Dienst also said he would “characterize the North American traditional metals business as margin challenged…tough and highly competitive.” He also commented one favorable market in North America is automotive while they are keeping an eye on for the industrial businesses around energy and oil and gas.

Source: Sims Metal Management