Key Highlights

  • Underlying NPAT rose to A$289.1 million from A$83.1 million in FY25.
  • More encouraging North American and US-based joint venture metal margins contributed to the result.
  • Sims Lifecycle Services, which repurposes data centre hardware, is now producing meaningful earnings.
  • The group reports four parts: North America Metal, SA Recycling, Australia and New Zealand Metal, and Sims Lifecycle Services.

How did a scrap metal recycler more than triple its Underlying Profit in one year? Sims Limited (ASX:SGM) gave its answer on 18 August 2026, reporting FY26 underlying net profit after tax (NPAT) of A$289.1 million, against A$83.1 million in FY25. The result matters because the improvement did not come from one source: more encouraging North American and US-based joint venture metal margins played a part, but so did Sims Lifecycle Services (SLS), a Business that repurposes data centre hardware and is now producing meaningful earnings.

What Sims does

Sims buys scrap metal from industrial and consumer sources, processes it and sells it to steel mills, foundries and other manufacturers. It reports four main parts: North America Metal (NAM); SA Recycling (SAR), a joint venture in the United States whose Earnings Sims shares; Australia and New Zealand Metal (ANZ); and SLS, which processes and resells used technology equipment. Recycled ferrous metal (steel scrap) competes with raw materials in steelmaking, while non-ferrous metal, such as copper and aluminium, is sold at prices tied to global Commodity markets.

The FY26 result

For the year to 30 June 2026, against FY25:

Sales Revenue A$8,007.5 million, up 6.9% (10.9% in constant currency).

Underlying EBITDA A$727.8 million, up 69.3%.

Underlying EBIT A$468.0 million, up 167.6%.

Underlying NPAT A$289.1 million, up 247.9%; statutory NPAT A$245.3 million, against A$2.4 million.

Underlying Diluted Earnings per Share of 147.7 cents, against 42.5 cents.

Return on invested Capital of 11.7%, against 4.5%.

The final Dividend was 20.0 cents per share, fully franked, taking the total FY26 dividend to 34.0 cents, up 47.8% from 23.0 cents. The Record Date was 1 October 2026 and payment was due on 15 October 2026. The company expects franking credits on future dividends to fall below 50% as more earnings come from non-Australian operations, which matters to investors who value franking.

Where the earnings came from

Divisional underlying EBIT shows the change clearly:

SLS: A$172.7 million, up 429.8% from A$32.6 million, on revenue of A$757.0 million (up 77.4%). Processed repurposed units rose 90.9% to 16.8 million.

SAR (joint venture): an earnings contribution of A$235.5 million, up 96.3%, with revenue of A$6,455.8 million.

NAM: A$135.9 million, up 69.7%, on revenue of A$4,841.3 million.

ANZ: A$55.8 million, down 22.7%, on revenue of A$1,776.0 million, as weaker ferrous margins offset higher revenue.

Proprietary intake was 6.4 million tonnes, up 4.9%, while proprietary sales were 6.3 million tonnes, broadly flat. The company points to supportive non-ferrous conditions in North America.

The data centre angle

SLS is the strategic story. The company says it expanded into Ireland, opened a Facility in India and progressed US sites for hyperscaler services, which is work for very large cloud and data centre operators.

The same announcement lists the main risk: the timing of data centre decommissioning is variable, which affects the Supply of DDR4 memory. A business that depends on customers retiring equipment, and on resale prices for second-hand components, is likely to be lumpier than metals trading.

Acquisitions, Balance Sheet and cash

Capital expenditure was A$203.4 million, plus A$97.5 million on acquisitions, including A$94.8 million for Tri Coastal Trading in Houston, which contributed four months of results. SAR completed 11 acquisitions, adding 12 sites. Net Debt was A$358.3 million at 30 June 2026, up from A$332.3 million a year earlier, and net interest expense rose A$10.7 million to A$44.4 million because of higher average debt funding working capital. Higher metal prices tend to tie up more working capital, so rising profits and rising debt can coexist.

Sector position and outlook

The ferrous market is where the picture is mixed. The company expects Chinese steel exports to keep pressuring ferrous markets, particularly in ANZ, and notes weaker domestic Demand and no steel Tariff protection in Australia. It expects US tariffs and new electric arc furnace (EAF) capacity to support ferrous scrap demand in North America. Electric arc furnaces melt scrap, so new capacity creates local demand for Sims' product. In ANZ, demand should rise over time with the Glenbrook EAF in New Zealand and, in the Board's view, at least one EAF in Australia. ANZ is also investing in fines plants at Broadmeadows and Pinkenba, an Auckland Metal Recovery Plant and a staged redevelopment of Kooragang Island.

Non-ferrous conditions are expected to remain supportive in FY27.

Risks and what to watch

The company flags Chinese steel exports, weaker Australian demand without tariff protection, variable data centre decommissioning timing, higher debt and interest costs, lower franking credits and early-year operational disruptions in ANZ. Items to watch include the first-half FY27 SLS result against the A$75 million to A$90 million guidance, non-ferrous margins, progress on EAF projects, net debt, and delivery of the ANZ site investments.