Sims Limited (ASX:SGM) operates metal recycling businesses across Australia, New Zealand and North America while Sims Lifecycle Services recovers, repurposes and recycles technology equipment. FY26 showed a material change in the group’s Earnings mix, as higher metal earnings were accompanied by a larger contribution from SLS and increased activity linked to data-centre infrastructure.

Underlying EBIT Rises to A$468 Million

Sims reported FY26 sales Revenue of A$8.008 billion, up 6.9% from A$7.494 billion in FY25.

Underlying EBITDA increased 69.3% to A$727.8 million, while underlying EBIT increased 167.6% to A$468.0 million.

Underlying NPAT reached A$289.1 million from A$83.1 million, and underlying diluted EPS increased to 147.7 cents from 42.5 cents.

Statutory Profit Also Increases

Statutory EBITDA increased to A$667.2 million, while statutory EBIT reached A$407.4 million.

Statutory NPAT was A$245.3 million, compared with A$2.4 million on the comparative basis presented in Sims’ FY26 results release.

The difference between statutory and underlying earnings reflects significant non-recurring items, non-qualifying hedges and other adjustments excluded from Sims’ underlying measures.

Return on Invested Capital Reaches 11.7%

Return on invested capital increased to 11.7% from 4.9% in FY25.

The improvement reflected higher operating earnings across SLS, North American recycling and the SA Recycling joint venture.

ROIC provides another measure of how effectively Sims is generating operating profit from capital invested across its recycling businesses.

SLS Revenue Reaches A$757 Million

Sims Lifecycle Services generated FY26 revenue of A$757.0 million, up 77.4%.

Underlying EBIT increased to A$172.7 million from A$32.6 million, while the underlying EBIT Margin rose to 22.8% from 7.6%.

SLS therefore accounted for approximately 37% of group underlying EBIT based on the reported FY26 figures.

Repurposed Units Increase to 16.8 Million

SLS processed 16.8 million repurposed units during FY26, up 90.9% from 8.8 million in FY25.

Sims attributed the increase to expanded hyperscaler activity and continued development of US data-centre capacity.

The division recovers equipment and components from decommissioned technology infrastructure for reuse, resale or recycling.

Memory Pricing Adds to SLS Earnings

Sims said higher resale revenue was supported by changes in DDR4 memory pricing during FY26.

Technology manufacturers have increasingly shifted production toward newer DDR5 and high-bandwidth memory products, constraining the availability of some older DDR4 components.

This supported secondary-market pricing during much of FY26, although component prices can change as Supply and Demand conditions move.

Data Centres Increase SLS Activity

Sims describes SLS as evolving beyond traditional IT asset disposition into a service provider embedded within hyperscaler and data-centre infrastructure ecosystems.

Decommissioning activity provides equipment that can be tested, repurposed or recycled.

Growth in data-centre infrastructure can therefore create additional processing volumes, although the timing of equipment replacement and decommissioning can vary between customers and periods.

North America EBIT Reaches A$135.9 Million

The North American metals Business generated underlying EBIT of A$135.9 million.

Revenue reached A$4.841 billion.

Performance benefited from higher non-ferrous prices and operating initiatives, while the business continued processing both ferrous and non-ferrous materials for domestic and export customers.

Metal-market conditions remain an important earnings variable.

SA Recycling Contributes A$235.5 Million

Sims’ share of underlying EBIT from the SA Recycling joint venture reached A$235.5 million, compared with A$120.0 million in FY25.

The improvement reflected higher average non-ferrous selling prices, increased sales volumes and trading-margin changes.

SA Recycling therefore remained one of the largest contributors to Sims’ FY26 underlying earnings.

ANZ EBIT Declines

Australia and New Zealand underlying EBIT declined 22.7% to A$55.8 million.

Revenue increased 12.7% to A$1.776 billion, supported by higher average non-ferrous selling prices and increased non-ferrous sales volumes.

However, lower ferrous margins reduced trading margin, offsetting part of the revenue increase.

Metals and SLS Now Provide Different Earnings Drivers

Sims’ metals operations remain exposed to scrap volumes, steel production, Commodity prices and trading margins.

SLS has a different earnings profile, influenced by data-centre decommissioning, technology-product cycles and secondary-market pricing for components.

The growing contribution from SLS therefore broadens the factors determining group earnings but also introduces exposure to technology-related cycles.

Operating Cash Flow Increases

Statutory operating cash inflow increased to A$423.6 million from A$297.1 million in FY25.

Capital expenditure on property, plant, equipment and intangible assets was A$203.4 million.

Sims also spent A$97.5 million on acquisitions, including A$94.8 million for Tri Coastal Trading in Houston.

The group ended FY26 with net Debt of A$358.3 million.

Dividend Increases to 34 Cents

Sims declared a fully franked final Dividend of 20 cents per share.

Combined with the 14-cent interim dividend, total FY26 dividends reached 34 cents per share, up 47.8% from 23 cents in FY25.

Sims has indicated that a growing proportion of future earnings may come from overseas operations, which could reduce the level of franking available on future distributions.

FY27 Focus Includes SLS and Metal Markets

Sims expects data-centre activity and demand for technology asset recovery to remain important for SLS.

In metals, the company continues to monitor non-ferrous prices, US steel demand and conditions in Australia and New Zealand.

Actual earnings will depend on trading margins, scrap availability, data-centre processing volumes and component resale pricing rather than any single growth driver.

Key Risks and Areas to Watch

SLS earnings could change if data-centre decommissioning volumes or secondary-market memory prices decline. Metals earnings remain sensitive to commodity pricing, steel production and scrap availability.

ANZ ferrous margins, foreign-exchange movements and integration of acquisitions are additional considerations. SLS processing volumes, segment margins, SA Recycling earnings and group ROIC will remain important indicators.