Metals recycling giant sees profits slump
CHALLENGING steel markets and falling metal prices have knocked profits and revenues at European Metal Recycling, one of the region’s largest family-owned companies.
The Warrington-based group, which employs around 3,000 people at 150 locations around the world, said 2014 turnover had fallen from £2.8bn to £2.5bn, mostly as a result of reduced metal prices. Operating profit fell nearly 70%, from £73m to £43m, while underlying earnings EBITDA was down 17% at £123m, which the company said was “largely driven by challenging steel markets.”
Despite the tough year, the company’s accounts reveal that net assets increased from £750m to £792m, while the highest paid director’s total package increased from £987,000 to £1.1m.
In a strategic report in the accounts, managing director Christopher Shepperd said the business had been hit by turbulence in the commodity and currency markets and also by competition from cheap Russian product flooding the market after economic sanctions were imposed last year.
“The steel markets were characterised by ongoing, relatively lacklustre demand. Structural overcapacity continues to exist in the global steel industry in the face of a relatively weak global economy.
“This was compounded during the year by oversupply of raw materials such as iron ore and as a consequence prices declined in 2014 by over 30%. Global macro-economic events also played a significant role, particularly in the fourth quarter.”
He added: “The effect of international sanctions against Russia had a dramatic effect on the Rouble, plunging over 30% against the US Dollar. The effect of this was two-fold, increased competitiveness from exported Russian steel and significant substitution of scrap metal with cheap Russina secondary products… The net result of this was a sharp, fourth quarter decline in pricing for recycled steel of over 20%.”