Sims Limited reported a robust fiscal 2026 half-year underlying profit, boosted by strong performances in its Lifecycle Services and North American metal operations. Despite statutory losses from derivative impacts, the company declared a healthy interim dividend and outlined strategic investments for future growth.
- Underlying NPAT rises 70.9% to $60 million
- Sales revenue grows 3.7% to $3.78 billion
- Underlying EBIT up 65.9% to $121.1 million
- Statutory results impacted by $41.1 million derivative losses and $60 million credit impairment
- Interim dividend declared at 14 cents per share
Strong Underlying Performance Amid Market Challenges
Sims Limited has delivered a compelling fiscal 2026 half-year result, with underlying net profit after tax (NPAT) soaring 70.9% to $60 million compared to the prior corresponding period. This surge was underpinned by a 65.9% increase in underlying earnings before interest and tax (EBIT) to $121.1 million, reflecting the company’s strategic focus and operational discipline across its business segments.
Sales revenue rose modestly by 3.7% to $3.78 billion, signalling steady demand despite ongoing market headwinds. However, statutory results painted a more complex picture, with a statutory net loss of $29.9 million largely due to $41.1 million in unrealised losses on derivative contracts and a $60 million expected credit loss related to the UK Unimetals receivable. These accounting impacts mask the underlying operational strength Sims demonstrated during the period.
Lifecycle Services and Metal Divisions Lead Growth
The standout contributor to Sims’ performance was its Sims Lifecycle Services (SLS) division, which posted a remarkable 247.5% increase in underlying EBIT to $49 million. This growth was driven by soaring demand for high-quality used DDR4 chips, fuelled by the AI chip boom and constrained supply of DDR4 due to shifts towards newer chip technologies. SLS’s ability to capitalise on this structural market imbalance positions it well for sustained growth.
Meanwhile, the North American Metal (NAM) business improved its underlying EBIT by 14% to $53.3 million, benefiting from disciplined sourcing strategies favouring unprocessed scrap and strong non-ferrous metal prices. Sims Adams Recycling (SAR) also contributed significantly, with a 24.4% increase in EBIT to $59 million, supported by favourable product mix and margin expansion.
Conversely, the Australia and New Zealand (ANZ) segment faced tougher conditions, with underlying EBIT down 43.3% to $21.5 million. Elevated Chinese steel exports continued to suppress ferrous prices locally, although strong non-ferrous prices provided some relief.
Strategic Investments and Market Outlook
Sims is actively investing in infrastructure, logistics, and digital transformation to enhance operational agility and scalability. Notably, the company expanded its footprint through bolt-on acquisitions in the US and is advancing technology integration and automation within SLS. These initiatives aim to sustain momentum and improve customer responsiveness as market dynamics evolve.
Looking ahead, Sims anticipates continued strength in non-ferrous metals and secondary-market pricing for DDR4 chips, underpinned by structural supply constraints and resilient legacy demand. However, challenges remain from persistent Chinese steel exports, which are expected to keep ferrous prices muted outside the US. The company expects tariffs and domestic demand to support ferrous scrap margins in North America, while remaining vigilant on cost management and market conditions.
Reflecting confidence in its underlying performance, Sims declared an interim dividend of 14 cents per share, signalling a commitment to shareholder returns despite statutory accounting headwinds.
Bottom Line?
Sims Limited’s strong underlying growth and strategic investments set the stage for resilience amid ongoing market volatility.
Questions in the middle?
- How will Sims manage derivative exposure and credit risks going forward?
- Can the Lifecycle Services division sustain its rapid growth as DDR4 chip markets evolve?
- What impact will continued Chinese steel exports have on ANZ segment profitability?