Sims blames Unimetals woes, derivatives contracts for half-year loss

Australia-based Sims Ltd., which operates metals and electronics recycling facilities in that part of the world, North America and Europe, has reported a loss of about United States 11 cents per share in the first half of its fiscal year 2026, which took place from July through December 2025.

The company reports its revenue and its underlaying earnings before interest, taxes, depreciation and amortization (EBITDA) both increased compared with one year earlier, however.

Sims cites “unrealized losses on derivative contracts as at the reporting date, together with a further AUD$60 million ($42.5 million) expected credit loss on the residual receivable from Unimetals in the United Kingdom” as reasons for its late 2025 red ink.

The latter situation pertains to the sale of former Sims metal recycling facilities in the U.K. to an investment group that rebranded those operations as Unimetals Ltd. in 2024. The newly formed company headed into a bankruptcy liquidation process last year before Sims was fully paid for the sale.

Despite those setbacks, Sims Group CEO and Managing Director Stephen Mikkelsen expresses confidence in the direction of the company, saying, “Underlying EBIT of AUD$121.1 million ($85.8 million) is a good solid result in a difficult market and reflects the strength of our strategy and the disciplined execution of key initiatives.”

Regarding the company’s Sims Lifecycle Services (SLS) electronics recycling and IT asset disposition (ITAD) business unit, Mikkelsen remarks, “SLS’s excellent first half is a reward for the effort and attention we have put into that division over the last five years, and it is satisfying to see the results coming through.”

He continues, “The extraordinary demand for artificial intelligence (AI) chips has in turn driven the demand for high quality used DDR4 chips, and SLS is well positioned to benefit from the significant increase in DDR4 prices specifically, and more generally the rise in all hardware prices. This enabled us to deliver at the top end of our guidance range for SLS.”

In the company’s larger metals recycling business unit, Mikkelsen says, “In North America, the group’s two metal businesses operate under distinct market structures, and both delivered strong outcomes,” referring to both Sims Metal assets and California-based SA Recycling, which Sims holds a 50 percent joint venture stake.

He says the Sims Metal-branded operations “achieved margin expansion through disciplined execution and greater unprocessed material, despite softer ferrous conditions” while at Sam, “Our [JV] benefited from its higher exposure to nonferrous retail and zorba, driving revenue growth and improved margins.”

In remarks accompanying its earnings, Sims also refers to SA Recycling as having “expanded its footprint through the completion of five bolt-on acquisitions” in the second half of 2025.

In the calendar year and fiscal year second-half now underway, Sims says “nonferrous markets are expected to remain strong, with sustained strength in nonferrous demand continuing to deliver significant trading margin contributions.”

Continues the company, “Long-term ferrous scrap fundamentals are expected to remain strong, as electric arc furnace (EAF) capacity and scrap demand continue to grow, supported by decarbonization, and government policies supporting onshoring.”

In a set of presentation slides accompanying its most recent earnings report, Sims cites improved metrics in several North American metals recycling market improved late last year, including increases in trading margin, shredder utilization, ferrous scrap intake and ferrous scrap export volumes.

The positive comments by Mikkelsen regarding the SLS electronics business are spelled out by a 70 percent year-on-year revenue spike recorded in that business unit in the second half of 2025 compared with one year earlier, owing in part to “resale pricing supported by robust hyperscaler demand and constrained DDR4 [chip] supply.”

The SLS business unit also saw its EBITDA margin rise from 11 percent to 17 percent in just one year.