Sims (ASX:SGM) Leans on Data Centre Recycling and Scrap Margins for Sharp FY26 Earnings Rebound

Aditi Sarkar

23 October 2026 09:40 PM AEDT

Sims (ASX:SGM) Leans on Data Centre Recycling and Scrap Margins for Sharp FY26 Earnings Rebound

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Highlights

• Underlying EBIT rose to A$468.0 million from A$174.9 million, while underlying net profit after tax reached A$289.1 million.

• Sims Lifecycle Services lifted underlying EBIT to A$172.7 million and processed 16.8 million repurposed units, up 90.9%.

• The SA Recycling joint venture delivered underlying EBIT of A$235.5 million, up 96.3%, after 11 acquisitions added 12 sites.

• The board declared a 20.0 cent fully franked final dividend, bringing the FY26 total to 34.0 cents per share.

Sims Limited (ASX:SGM) turned statutory net profit of A$2.4 million in FY25 into A$245.3 million in FY26, and the swing came from more places than one. Metal trading margins improved, the SA Recycling joint venture roughly doubled its earnings, and the lifecycle services arm expanded its role in the data centre equipment chain. Shares were trading at A$19.26 on 23 October 2026, down 4.46%.

Earnings Rebuilt Across the Portfolio

Sales revenue for the year to 30 June 2026 rose 6.9% to A$8,007.5 million. Underlying EBITDA climbed 69.3% to A$727.8 million, and underlying EBIT rose to A$468.0 million from A$174.9 million. Underlying diluted earnings per share reached 147.7 cents, against 42.5 cents a year earlier, and return on invested capital improved to 11.7% from 4.5%.

Operating cash inflow rose to A$423.6 million from A$297.1 million. Net debt stood at A$358.3 million at year end, compared with A$332.3 million twelve months earlier, as higher working capital lifted average debt. Capital expenditure was A$203.4 million, and acquisitions totalled A$97.5 million, including A$94.8 million for Tri Coastal Trading in Houston.

The final dividend of 20.0 cents is fully franked, with a record date of 1 October 2026 and payment on 15 October 2026. Sims said franking credit availability on future dividends is expected to fall below 50% as more earnings come from non-Australian operations.

Four Divisions, Very Different Years

North America Metal lifted underlying EBIT 69.7% to A$135.9 million, with trading margin up 9.2%. SA Recycling, the joint venture, more than doubled its prior-year contribution of A$120.0 million to A$235.5 million. Proprietary intake volumes grew 4.9% to 6.4 million tonnes, while average metal sales prices rose 6.1%.

Sims Lifecycle Services posted the sharpest recovery, with underlying EBIT of A$172.7 million against A$32.6 million. Australia and New Zealand went the other way. Underlying EBIT fell 22.7% to A$55.8 million as weaker ferrous margins pulled trading margin down 1.3% to A$370.7 million.

New Capacity and a Changed Leadership Line-Up

Capital is flowing into processing and logistics. In Australia and New Zealand, fines plants are under construction at Broadmeadows and Pinkenba, a metal recovery plant is being developed in Auckland, and a rail siding is being built for the Glenbrook electric arc furnace. Lifecycle Services is expanding into Ireland, opening a facility in India and developing US sites for hyperscaler services.

Management also reshaped its leadership. Rob Thompson became President, Global Sims Metal on 1 July 2026, while John Glyde stepped down as Managing Director, ANZ Metal and stays on until mid-2027 to work on the Pinkenba site and other projects. Ingrid Sinclair is leaving as President of Lifecycle Services, with a successor search under way. Jeff Wysocki joined as Group Chief Technology Officer on 1 May 2026.

What Management Expects for FY27

Sims expects first-half FY27 underlying EBIT from Lifecycle Services of A$75 million to A$90 million. It said DDR4 market fundamentals remain strong, though the timing of data centre decommissioning is variable.

In metals, the company expects the factors that supported non-ferrous demand and prices in FY26 to remain supportive. US tariffs are expected to protect domestic steel producers and support scrap demand, alongside new electric arc furnace capacity and data centre construction. In Australia and New Zealand, Chinese steel exports are expected to keep pressure on ferrous prices, while the Glenbrook ramp-up and at least one Australian furnace are expected to lift domestic demand over the medium term.

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