Commodity prices recovery boosts metal recycling giant
Warrington-based European Metal Recycling made an encouraging return to profitability in the 2016 calendar year after enduring a torrid 2015 in which it sustained post-tax losses of £22m.
The company, which specialises in recycling high value commodities from a range of streams such as vehicles, durable consumer goods, industry, construction and demolition, saw its underlying profit climb from £7m to £94m in the year to December 31.
Turnover also rose from just above £2bn to £2.221bn in the period as the commodity prices, which suffered their worst decline since 2008 in 2015, recovered during 2016.
“A return to more normalised markets during 2016 together with the impact of a number of projects has resulted in the group achieving significant growth in underlying profitability in 2016,” said director Christopher Sheppard in his strategic report.
However, the company suffered a statutory loss after tax of £155m (2015: -£62m) as a result of exceptional net of tax of £194m.
Sheppard said the main macroeconomic risk for 2017 results from the UK’s decision to leave the European Union.
However, the company has carried out an assessment of the impact of Brexit on the group and concluded that with regard to the weakness of the pound, “with operations and revenues in the UK, the USA, and Europe, the group has something of a natural hedge to the foreign exchange movements already experienced and anticipated in the future.”
Sheppard’s report goes on: “The group expects (the weakness of the UK economy) could have an impact on UK scrap arising as a result of manufacturing, consumer and construction activity falling.”
On trade barriers and tariffs its said: “The group believe that, although there could be some effect from the Brexit decision, China is the overwhelming driver of the economics for the sale of hard commodities.”
Meanwhile, the development of the company shipbreaking operations in Brownsville, USA has also continued in 2016 and will progress further in 2017.
In August, 2016, a bid was won for the recycling of a new US Navy carrier, the US Independence. The aircraft carrier arrived at Brownsville in June, 2017 and will be the third one undergoing the EMR’s decommissioning and recycling service at the facility.
The group has also now acquired 100% ownership of EMR Equity Gold and during the current year it has disposed of its entire interest (75.9%) of ordinary shares of MBA Polymers (United Kingdom) to group undertaking Invenens Ltd.
Net debt at December 31 was £256m (2015: £107m).
Group chief financial officer Michael Hughes resigned during the year and his role has been taken by Edwin Leijnse.
The company employs 2,910 people, 1,537 of which are based in the UK.
