In recent investor presentations and a trading update, the global metals and electronics recycler predicts a potential doubling of earnings in its current fiscal year.
Australia-based Sims Ltd., which operates globally in the recycled metals and electronics recycling sectors, is forecasting fiscal year 2026 underlying earnings before interest and taxes (EBIT) of from 350 million to 400 million Australian dollars ($251 million to $287 million).
If the recycling firm hits that target, it would represent an increase of from 230 to 275 percent in EBIT compared with the previous fiscal year, when it earned 106 million Australian dollars ($68.5 million).
Sims is more than three-quarters of the way through its 2026 fiscal year, which will end June 30, 2026.
In its electronics recycling-focused Sims Lifecycle Services (SLS) business unit, Sims credits a high-value memory chip market for increased profits, while it points to rising values for the mixed shredded metal zorba grade for higher margins in its Sims Metal business unit and in the SA Recycling United States joint venture in which it has a 50 percent stake.
“The Metal business continues to be supported by strong nonferrous prices, improved U.S. domestic ferrous prices and the focus on sourcing unprocessed material,” writes the company in a March trading update.
“Higher aluminum prices in reaction to supply concerns have contributed to a further uplift in zorba prices [and] a materially improved [fiscal year] second half performance is expected,” adds the firm.
In addition to releasing a trading update, Sims also in March posted investor presentation slides for each of its three main operating units.
The company describes SLS as “a core driver of Sims’ earnings growth and valuation,” having contributed about 40 percent of company EBIT in the first half of the current fiscal year, “reflecting its rapid growth and high operating leverage.”
In its SLS presentation, Sims portrays the growing demand for double data rate 4 (DDR4) memory chips that can be found in end-of-life equipment, which it says has been caused by global chipmakers’ investments in newer generation memory chips and phaseout of DDR4 production.
In its North American Metals (NAM) presentation, Sims points to its “ability to dynamically allocate volumes between domestic steelmakers and export markets depending on relative pricing and demand conditions” as a profitability factor.
On the nonferrous side, NAM portrays a growing retail or obsolete scrap purchasing trend, saying its higher intake of unprocessed scrap is “driving additional nonferrous recovery and margin per ton.”
The company’s presentation on SA Recycling mentions that company’s operation of 22 auto shredding plants and nine copper wire and cable processing plants throughout the U.S.
The same presentation offers a five-year trend line displaying a largely stable and sometimes falling value for ferrous shred contrasted with an almost constantly rising price for the aluminum-intensive zorba grade since 2021.
The growth of SA Recycling’s asset base also is portrayed, with the company adding 52 yards or facilities from 2009 to 2020 followed by adding another 76 locations from 2021 through early 2026. The company says it is maintaining an approximately 50 percent shredder utilization rate throughout the growth phase.