In order to acquire one of the few remaining Brisbane sites with deep water access, global recycling giant Sims (ASX: SGM) is forking out $88 million for a block of land in the city's portside suburb of Pinkenba.
The deal will see SGM acquire 140,000sqm in the Port of Brisbane, which will serve as an entryway for Handymax vessels capable of carrying up to 50,000 tonnes of metal products.
While SGM will leave the site untouched in short term, it also has the intention to create “a metals processing and resource renewal facility” capable of producing “high-quality ferrous and non-ferrous metals”.
As part of its plans, the Sydney-based company is also looking to implement on-site waste treatment and hydrogen generation.
“This transaction is consistent with the company’s strategy to grow in large coastal markets using top tier processing facilities and bulk export optionality,” Sims CEO and managing director Alistair Field said.
“It is our intention to fund this land acquisition through recycling surplus and/or underperforming capital.
“We have already identified several suitable opportunities to realise this intention.”
Founded in 1917, Sims processes scrap metal from businesses, recyclers and the general public in more than 15 countries - including the US, the UK and Australia.
The company anticipates direct shipments from the new site – which will cost an additional $5 million in stamp duty – will commence in FY23.
SGM said “net benefits through additional revenues and cost savings” will help produce returns “greater than Sims cost of capital on the total investment.”
The acquisition comes a few months after the group reported $4.26 billion in revenue for HY22, reflecting an increase of 80 per cent year-on-year. Underlying EBITDA also grew by 541 per cent to $361.7 million.
SGM's North American division delivered the strongest results, recording an EBITDA of $142.2 million, followed by Australia & New Zealand ($94.9 million) and the UK ($29.4 million).
The company also recognised a statutory net profit of $253.2 million, reflecting a year-on-year increase of 377 per cent.
The results were attributed to “higher sales volumes and higher material prices” as well as “disciplined margin management” – which saw an increase of 45 per cent.
Shares in SGM are down 4.71 per cent to $17.01 each at 1:03 pm AEST.
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