Sims (ASX:SGM) executives used the company’s FY2026 half-year earnings call to highlight a stronger contribution from non-ferrous metals and a sharp upswing in its Sims Lifecycle Services (SLS) business, while acknowledging that ferrous conditions remain challenging outside the tariff-protected U.S. market. Group CEO and Managing Director Stephen Mikkelsen was joined by CFO Warrick Ranson and business leaders for ANZ, North American Metal (NAM), and SLS.
Strategic progress: intake mix, logistics, shared services, and property focus
Mikkelsen said Sims has increased unprocessed intake—particularly in NAM—which management said supports margins when processed into higher-value products. He also pointed to new supply agreements in ANZ (with New Zealand Steel and Alter) and SLS’s expansion into Ireland.
The company is transitioning to an outsourced global shared services model, which management said is expected to improve service, lower costs, and help integrate new operations. Sims has also added a chief digital officer and appointed a dedicated role to support “deeper integration” with hyperscalers’ workflows.
Ranson emphasized a growing focus on unlocking value from Sims’ property portfolio and said the company is committing a dedicated resource to manage that opportunity, particularly for sites where the highest-value use may not remain metal recycling over the next 5–10 years.
Half-year performance: non-ferrous strength and surging SLS demand
Mikkelsen said metal sales revenue was flat even as sales volumes fell 2%, attributing resilience to pricing and contribution from non-ferrous products such as copper, aluminum, and Zorba. He also noted that metal trading margin percentage was flat despite higher non-ferrous revenue, arguing this reflected an improvement in ferrous trading margin percentage through “disciplined buying” of non-dealer material.
SLS was a major theme of the call. Mikkelsen said SLS revenue rose nearly 70% and repurposed units increased close to 18% in the first half, driven by demand for DDR4 memory. He also highlighted a 7.7 percentage point increase in SLS EBIT margin.
Ranson added that non-ferrous trading represented over 40% of group revenue in the half, up from around 35% in the comparable period. He said LME copper increased about 13.5% year-on-year and LME aluminum rose 9.8%, while Zorba pricing benefited from higher aluminum spot prices in Asia. On SLS, Ranson said DDR4 prices rose more than 450% year-on-year, driven by increased demand against diminished supply as manufacturers focus on new-generation products.
Regional metals: tariff protection in the U.S., tougher ANZ ferrous backdrop
Management contrasted North American conditions with ANZ. Mikkelsen said tariffs have supported U.S. domestic steel and scrap pricing even as U.S. construction activity softened, while falling global ferrous scrap prices—linked to higher Chinese exports—have pressured ANZ results.
Ranson said NAM’s total inflows were consistent with the prior period, while converted metal volume declined 3% as the business prioritized unprocessed intake. He noted average realized ferrous prices fell around 5% period-on-period, a change he said reduced underlying EBIT for NAM by about $13 million, which the company sought to offset through margin discipline and cost initiatives.
In ANZ, Ranson said subdued international markets continued to pressure ferrous margins and also affected domestic pricing. He said favorable non-ferrous pricing supported revenue and helped offset shredder downtime at St. Mary’s in the first quarter. ANZ also faced elevated consumable input costs, including waste disposal and electricity. During Q&A, ANZ Managing Director John Glyde said second-quarter results improved due to higher volumes—particularly in non-ferrous and Zorba—catch-up after the first-quarter outage, some competitor share gains, and cost control. He cautioned, however, that ferrous markets remain “very, very difficult” and noted a strengthening Australian dollar as a headwind.
On SA Recycling, Ranson said the joint venture benefited from non-ferrous strength and reported its first “upmarket” for ferrous pricing since April, occurring in December. Mikkelsen said SA Recycling has maintained trading margin resilience and is positioned to benefit when the ferrous cycle improves.
Tri-Coastal acquisition: Houston optionality and land-sale potential
Mikkelsen summarized the recently announced Tri-Coastal (TCT) acquisition, saying it provides deep-water access that expands market options and increases Sims’ presence by more than 350,000 tonnes. He said the deal reduces operating costs through an infrastructure service agreement and allows Sims to sell its Houston land holdings, which management estimates at more than $100 million, including the Maya Shell property.
Management said Sims paid “a bit less than 4x EBITDA post synergies.” The combined Houston-related businesses (existing ferrous and non-ferrous operations plus TCT) are expected to generate annual EBITDA of $25 million and deliver return on invested capital above 20%, according to Mikkelsen.
SLS outlook and Ireland expansion: ramp in FY2027, guidance update planned
Mikkelsen described DDR4 pricing as “very strong” and attributed it to a supply-demand imbalance created as manufacturers shift to DDR5 to meet AI-driven hyperscaler demand. He said some market participants expect the imbalance to persist beyond 2027. Executives discussed timing effects in Q&A, with SLS President Ingrid Sinclair saying Sims typically sees a one- to two-month lag between pricing moves and financial impact.
On Ireland, Mikkelsen said Sims expects to open a 120,000-square-foot facility in early April, with meaningful EBIT contribution not expected until June or July due to ramp-up costs. He said management anticipates growing the site over two years to repurpose about 1 million units per year, skewed toward DDR4, supported by an existing hyperscaler relationship. In Q&A, management said full run-rate is expected sometime in FY2027.
Executives said they plan to provide additional SLS guidance at a March investor presentation in Nashville, noting strong early second-half conditions but emphasizing that the company was only one month into the period at the time of the call.
Ranson also discussed balance sheet movements, including higher working capital tied to non-ferrous price increases, and noted derivative-related broker deposits that management expects to unwind in the second half. The board declared an interim dividend of AUD 0.14 per share, payable in March.
About Sims (ASX:SGM)
Sims Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. The company operates through six segments: North America Metals, Investment in SA Recycling, Australia/New Zealand Metals, UK Metals, Global Trading, and Sims Lifecycle Services. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials.
