Sims Limited Nearly Triples Underlying EBIT as Revenue Climbs 4.1%
Sims Limited reported a 4.1% rise in FY25 sales revenue to $7.49 billion and a 198% surge in underlying EBIT, driven by strong metal trading margins and AI-related demand growth. The company also boosted its fully franked dividend by 130%, signaling confidence despite ongoing market headwinds.
- Sales revenue increased 4.1% to $7.49 billion
- Underlying EBIT surged 198% to $174.9 million
- Statutory EBIT declined 47.3% due to prior year asset sale gains
- Fully franked dividend raised 130% to 23.0 cents per share
- Strong growth in Sims Lifecycle Services driven by AI demand
Robust Revenue Growth Amid Market Challenges
Sims Limited closed FY25 with sales revenue of $7.49 billion, marking a 4.1% increase over the previous year. This growth was supported by a 4.0% rise in metal average sales prices, particularly buoyed by a stronger non-ferrous component, despite a modest 3.8% decline in proprietary metal sales volumes. The company’s diversified portfolio, spanning North America, Australia, New Zealand, and its lifecycle services, helped mitigate pressures from a challenging ferrous market environment.
Underlying EBIT Nearly Triples, Statutory EBIT Reflects Prior Year Gains
Underlying earnings before interest and tax (EBIT) soared 198% to $174.9 million, reflecting improved metal trading margins and operational discipline. This contrasts with a 47.3% drop in statutory EBIT to $68.6 million, which was impacted by the absence of a significant $182.6 million gain on asset sales recorded in FY24. The underlying result underscores the company’s operational resilience amid global oversupply and trade uncertainties affecting ferrous scrap markets.
Segment Highlights, North America and Lifecycle Services Lead
North America Metal (NAM) delivered a standout performance with underlying EBIT increasing over sevenfold to $80.1 million, driven by acquisitions and a 20.2% boost in trading margins. SA Recycling also contributed strongly, with EBIT up 17.4% supported by eight strategic acquisitions. Meanwhile, Sims Lifecycle Services (SLS) capitalized on accelerating AI-related demand, growing processed repurposed units by 44.3% and nearly doubling EBIT to $32.6 million.
Capital Investment and Strategic Moves
The company invested $200.7 million in growth and sustaining projects, focusing on infrastructure upgrades, advanced separation technologies, and logistics enhancements. The sale of the UK Metal business simplified the portfolio, allowing Sims to sharpen its strategic focus. Investments in automation and capacity expansion at SLS position the company well to benefit from the expanding hyperscaler data center market.
Outlook, Navigating Headwinds with Structural Tailwinds
Looking ahead, Sims Limited anticipates sustained strength in non-ferrous markets and benefits from US tariff protections supporting domestic ferrous demand. However, persistent Chinese steel exports pose a challenge to ferrous pricing outside the US. The company remains optimistic about long-term fundamentals, driven by decarbonisation trends, growing electric arc furnace capacity, and AI-driven demand for repurposed materials.
Bottom Line?
Sims Limited’s FY25 results highlight strategic agility and growth in high-value segments, setting the stage for navigating ongoing market complexities.
Questions in the middle?
- How will Sims manage ferrous market pressures from continued Chinese steel exports?
- What impact will AI-driven demand have on Sims Lifecycle Services’ growth trajectory?
- Will capital investments in logistics and technology translate into sustained margin expansion?
