Sims Lifecycle Services resold considerably more IT devices in the latter half of 2022, but softer demand resulted in lower selling prices and inflation took its toll on profits.
The company, which is the ITAD arm of global metals recycling giant Sims Limited, on Feb. 14 reported its financial numbers for the first half of its 2023 fiscal year, which corresponds with the period of July-December 2022.
Sims Lifecycle Services (SLS) tallied total revenue of 167.4 million Australian dollars (about $115.5 million; all dollars below in U.S.). That number was up 0.8% year over year. But SLS underlying earnings before interest and taxes (EBIT) was $4.8 million, a year-over-year drop of 29%.
The company, which has shifted from e-scrap recycling to ITAD and data center decommissioning services in recent years, noted that it repurposed 1.8 million IT devices during the first half of the 2023 fiscal year, up 39% from the prior-year period. The company noted that the increase came “despite supply chain constraints limiting the release of cloud material.”
But SLS experienced lower sales prices per year, as a result of “China lockdowns and low consumer sentiment driven by high inflation,” according to a financial presentation. And underlying EBIT dropped “due to margin pressures and inflationary pressures on costs,” a press release noted.
In the short term, the company says it expects market conditions to improve. It cited a forecast from market research firm TrendForce that found used equipment prices are expected to normalize toward the end of calendar year 2023.
“The opening up of China will be positive for the global metal demand balance and SLS resale prices and volumes, although the timing of this is uncertain,” the press release stated.
A detailed financial filing noted that the SLS business experienced “sites closures and realignment of processing capability” during the first half of the 2023 fiscal year.
When asked which facilities closed, an SLS spokesperson sent a quote from Sean Magann, chief commercial officer for SLS, stating that “we are continuing to right size our locations as we grow as evidenced by our recent expansion into the Atlanta market.”
A comparison of SLS’s website now and a year ago, shows that an SLS ITAD and e-scrap recycling facility in Auckland, New Zealand is no longer listed. Facilities in Atlanta and Durham, U.K. have been added over the past year.
The financial presentation notes that SLS had 816 employees during the first half of the 2023 fiscal year, down from 826 during the prior-year period.
Overall, parent company Sims Limited tallied $2.64 billion in revenue during the first half of the 2023 fiscal year, down 10% from the prior-year period. The company’s underlying EBIT was $64 million, down 74% year over year.
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