The delayed fallout from the global financial crisis of 2007 and 2008 yesterday hit metals recycler Sims Metal Management, with a USD 614 million pre tax asset write down that will plunge earnings into the red for the December half.

The company also said it expected to post earnings before interest, tax depreciation and amortization of USD 141 million for the half, little changed from the USD 138 million earned a year earlier.

The company blamed the sluggish US economy for its woes, which dragged down overall scrap intake to 3 million tonnes in the December quarter, well short of the 4 million tonnes handled in the September quarter.

Sims said that ''Results were impacted by continued difficult operating conditions for the traditional metals business, particularly in North America. Results for Australasia and Europe (excluding the UK traditional metals business) remained solid. Results for Sims Recycling Solutions were generally in line with the prior corresponding period.''

The hefty asset write down was due primarily to US acquisitions and joint ventures finalized before the end of fiscal 2008, with the severe downturn following the global financial crisis squeezing asset values, it said. Analysts said they were less concerned with the valuation write-down than the dampening of earnings expectations flagged for the December half.

Ms Emily Behncke analyst at Deutsche Bank said that ''Demand declined very quickly in the December quarter. 'Coming into winter, activity slowed.''

(Sourced from www.smh.com.au)