Falling commodity prices hit family-run recycling giant
REVENUE and profits have continued to plummet for one of the region’s largest family-owned companies – European Metal Recycling – as a result of slump in commodity prices.
The Warrington-based group, which employs around 3,000 people at 150 locations around the world, was the North West’s highest place company in last monthy’s annual Top Track 100, ranking 13th nationally, ahead of big names such as Euro Garages, Shop Direct and Bibby Line.
Sales were down to £2bn for the year to the end of December 2015, from £2.5bn in 2014 and it made an operating loss of £23m compared to a £76m operating profit in the prior period.
A major factor in its performance has been “the most precipitous, sustained decline in commodity prices witnessed since 2008”, said managing director Christopher Shepperd.
An economic slowdown in China and other emerging markets, reducing global demand for hard commodities is also being blamed.
Deflation of the China RMB and other emerging market currencies has been an additional influence.
Meanwhile, the strength of the US economy together with the sluggish global picture providing additional strength to the dollar increased the cost of hard commodities to China and the emerging economies.
Gross profit fell by £93m to £391m, while the group continued to exercise “strong monitoring and control over costs”.
In spite of additional leasing costs and the acquisition of new sites in Holland and the UK, total overheads in 2015 fell by 4.8% to £421m, mainly due to a lower headcount, reduced site costs and lower oil prices.
EBITDA fell from £123m in 2014 to £43m for the year, driven by the one-off impact of the price reductions.
However, a reduction in the company’s net debt from £299m at the start of the year to £108m by December 31, maintained leverage against earnings at extremely prudent levels, despite the difficult year.
Shepperd said: “In spite of the challenging global environment, the group has continued to invest in its core capabilities during the year, through a £41m group capital spend and the acquisition of several strategically important sites in Europe and the UK.”
In May 2015, the group acquired an additional 40.9% interest in the MBA Polymers UK plastics joint venture in Worksop, Nottinghamshire and assumed management control.
£30m has been invested in the company’s waste-to-energy joint venture, Innovative Environmental Solutions UK.
“The group maintains a strong balance sheet and liquidity position with net assets at £730m,” added Shepperd.
