Shares in Sims Metal have slumped by more than six per cent after the world's biggest scrap recycler warned of flat underlying earnings for the second half.
Falling iron ore prices and bad weather in North America had sparked significant drops in ferrous scrap prices and sales volumes during the third quarter, Sims said on Wednesday.
While recent improvements in the weather and prices are expected to improve fourth quarter sales volumes, Sims does not expect them to offset the severe conditions in the previous three months.
As a result, Sims expects second half underlying earnings before interest and tax to be in line with the previous corresponding period.
Sims said it was focused on improving gross margins and accelerating various commercial and operational strategic plans to help get the company back on track.
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"The benefits from the company's strategic internal initiatives have assisted to partially mitigate the challenges faced in the third quarter," Sims said.
Sims overcame falling commodity prices and metal volumes to lift its first half underlying profit to $64.4 million from $42.1 million a year earlier.
Shares in Sims Metal slumped 78 cents, or 6.7 per cent, to $10.77.
