The fallout from the slowing of China’s economy has spread from the iron ore producers to the resources service companies.
Even scrap metal dealers have been hit by a market glut and weak demand.
Sims Metal Management, the metals and electronics recycling company, today announced it’s going on the market to buy back up to 10% of the company for about $147 million.
The company’s shares rose 1.6% on the news to $7.30. But the shares have fallen about 30% in a week and are still well below the year’s high of $13.
The company last week issued a profit warning, saying its business has been hit by slowing demand and low prices.
Ferrous metals prices have fallen 30% since August when the company reported an 88% fall in full year statutory profit to $109.9 million.
Sims has been selling off non-core assets and cutting costs. The company says it has identified 35 facilities to close or sell with up to 800 jobs to go as well.
CEO Galdino Claro says Sims is committed to efficient capital management and delivering improving returns to shareholders.
“This buy-back reflects the confidence that my executive leadership team and the board has in the outlook for the business, and the attractive underlying value of the operations relative to current market prices,” says Claro.
Based on the yesterday’s closing share price of $7.19, 10% of the issued share capital, or around 20.5 million ordinary shares, would represent a buy-back program of about $147 million.
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