Sims Ltd (SMSMY) (Half Year 2026) Earnings Call Highlights: Strong SLS Growth and Strategic …

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Tue, February 17, 2026 at 2:00 PM GMT+9 4 min read

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**Metal Sales Revenue:** Flat, despite a 2% decrease in sales volumes.

**SLS Revenue:** Increased by nearly 70%.

**Repurposed Units:** Up close to 18%.

**Unprocessed Scrap Increase:** 3.5% point increase, driving higher shredder capacity utilization.

**SLS EBIT Margin:** Increased by 7.7% points.

**Non-Ferrous Revenue:** Increased, with prices rising from around AUD 4,100 to nearly AUD 5,000.

**Trading Margin Percentage:** Improved by 5% points over the last 2 years in North America.

**Domestic Shred Premium:** Currently at $50 per ton.

**Tri-Coastal Acquisition:** Expected annual EBITDA of USD 25 million and a return on invested capital over 20%.

**DDR4 Memory Prices:** Increased by over 450% year on year.

**Interim Dividend:** $0.14 per share, payable in March.

**Net Assets:** Approximately $2.5 billion at balance date.

**Working Capital Expansion:** $200 million due to uplift in non-ferrous prices.

**Capital Expenditure Guidance:** Between $120 to $140 million for the full year.

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Release Date: February 16, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sims Ltd (SMSMY) reported a strong performance in its SLS division, with revenue up nearly 70% and repurposed units up close to 18%, driven by high demand for DDR4 memory.

The company has made significant strides in operational efficiency, particularly in North America, where logistics infrastructure improvements have allowed for better domestic delivery and increased shredder capacity utilization.

Sims Ltd (SMSMY) has extended its debt facilities by 12 months, positioning its balance sheet for further growth.

The company has successfully integrated its operations with a global shared services model, which is expected to lower costs and improve service offerings.

Sims Ltd (SMSMY) has maintained a best-in-class safety record, with a low total recordable injury frequency rate and strong tracking on lead indicators.

Negative Points

The ANZ region continues to face challenges due to a subdued global ferrous environment and lacks the tariff protection enjoyed by North American operations.

Global ferrous scrap prices have fallen due to increased Chinese exports, negatively impacting the ANZ region's performance.

The company faces ongoing challenges with the recovery of its UK metal receivable following the collapse of a third-party business.

Sims Ltd (SMSMY) is exposed to currency fluctuations, with the strengthening Australian dollar impacting export sales and domestic sales on an export parity basis.

The company has noted that while non-ferrous markets are strong, the flat metal trading margin percentage indicates challenges in maintaining margins despite higher revenue from non-ferrous products.

 






Story Continues  

Q & A Highlights

Q: Can you explain the improvement in ANZ conditions post-AGM trading update? A: Stephen Mikkelsen, CEO, explained that improved volumes in the second quarter, particularly in non-ferrous and absorber pricing, contributed to the better performance. The company also managed to catch up on the first-quarter outage, and good cost control helped deliver better-than-expected results.

Q: How quickly do non-ferrous price rises benefit the business? A: Stephen Mikkelsen, CEO, noted that higher prices generally drive more volume out of the market. The recent extraordinary price run-up has positioned the company well to capture increased volume. Rob Thompson, President of North America Metal, added that the integration with Lumisource and Northeastern Metal Trading has enhanced their consumer relationships and infrastructure, driving volume and margin improvements.

Q: What is the impact of DDR4 pricing on SLS, and how does it flow through? A: Stephen Mikkelsen, CEO, explained that there is a lag in DDR4 pricing impact due to contract positions set in December. Ingrid Sinclair, President of SLS, added that the lag is typically one to two months, with the December price rise expected to impact the second half more significantly.

Q: Can you provide insights into the SLS expansion in Ireland and its materiality? A: Stephen Mikkelsen, CEO, stated that the Dublin facility is expected to ramp up in the second half of the year, with full impact anticipated in fiscal year 2027. Ingrid Sinclair, President of SLS, mentioned that the facility is material to SLS’s results, with plans to repurpose approximately one million units annually, focusing on DDR4s.

Q: How does the company plan to grow SLS earnings beyond DDR4 price increases? A: Ingrid Sinclair, President of SLS, highlighted that growth will come from increased volume through current contracts and geographic expansion. The business also benefits from selling other components like hard drives, and future growth will include DDR5s as they enter the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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