Sims (SGM) H2 2025 earnings summary

Executive summary

• Underlying EBIT surged 198% to $174.9 million, with underlying EBITDA up 48.1% to $430 million, driven by margin discipline, SLS growth, and cost reductions despite lower volumes and challenging market conditions.

• Sales revenue increased 4.1% year-over-year to $7,494.0 million, supported by higher metal prices and non-ferrous pricing.

• Statutory NPAT was $2.4 million, impacted by non-recurring items such as asset impairments and restructuring costs.

• Safety performance reached record lows in lag indicators, with high employee engagement during significant organizational change.

• Final dividend increased to 23.0 cents per share, up 130% year-over-year, reflecting strong cash returns and UK Metal divestment.

Financial highlights

• Underlying EBITDA rose 48.1% to $430.0 million; underlying NPAT reached $83.1 million, reversing a prior-year loss.

• Underlying EBIT margin improved to 2.3%, reflecting a margin-first strategy.

• Net operating cash flow was $297 million, including a $66 million tax payment related to a prior year asset sale.

• Net debt at $332.3 million, with gearing at 19.0%.

• Return on invested capital increased to 4.9% from 1.8% year-over-year.

Outlook and guidance

• Non-ferrous demand expected to remain robust in FY26, supporting strong trading margins across all regions.

• U.S. domestic scrap premiums anticipated to persist, while ANZ ferrous margins remain under pressure from Chinese steel exports.

• SLS is well positioned to capitalize on hyperscaler data centre expansion and AI-driven demand.

• Ongoing self-help initiatives and further margin optimization planned for FY2026.

• Long-term fundamentals remain strong, with EAF capacity and scrap demand growing, supported by decarbonisation and government policies.