Sims announces inventory write-down
By Editorial Staff, Resource Recycling
The fallout from Sims Metal Management's inventory fraud investigation in the U.K. continues, with the company announcing it will write-down $81 million (U.S.) of inventory — up from an earlier write-down estimate of $62 million.
On Jan. 20, the recycling giant announced to shareholders that inventory associated with its U.K. e-scrap businesses in Long Marston, England, and Newport, Wales, was in question. The board of directors quickly set up a committee to oversee an investigation into the discrepancy, which concluded Feb. 14 that 29 percent of the inventory in the U.K. would need to be written-down. These findings were corroborated by SMM's external auditor PricewaterhouseCoopers.
The findings include a $16 million write-down for the first half of the company's 2013 fiscal year.
Additionally, the company announced that the findings would negatively affect goodwill as of Dec. 31, 2012. SMM North America goodwill will include impairment charges of $301 million in FY 2013. SMM U.K. and Sims Recycling Solutions U.K. include impairment charges of $65 million, which will be reflected in the restatement of results for prior periods.
The company declined comment on this story, as it is in its quiet period before it reports the first half of its FY 2013 results on Feb. 21.