Sims Limited's stock price fell 12.8% to $22.52 after the company reported a mixed outlook for the second half of 2026. Despite strong full-year FY2026 earnings, with underlying EBIT jumping 169.8% to AUD 468 million, investors expressed concern over near-term growth in Sims Lifecycle Services and the sustainability of recent pricing strength in metals.
The company delivered a strong FY2026 performance, driven by better pricing, improved network utilization, and tighter cost control. Management highlighted a stronger structural earnings base, with lower unit costs and more disciplined capital allocation. Operating cash conversion exceeded 70% of EBITDA, while capital expenditure totaled AUD 488 million.
Key Highlights
The company's shift toward higher-value products contributed to its strong performance. In metals, non-ferrous recovery benefited from strong copper, aluminum, and Zorba pricing. In Sims Lifecycle Services, the business expanded its role in data center refresh and decommissioning, repurposing memory chips and other components for resale or reuse.
The market's reaction suggests investors are looking ahead to the next half, with concerns over guidance for Sims Lifecycle Services and the sustainability of recent pricing strength in metals. Management expects first-half FY2027 underlying EBIT of AUD 75 million to AUD 90 million, which is well below the combined metals EBIT reported in H2 FY2026.
Outlook
The company sees a longer runway for memory repurposing, with DDR4 opportunities expected to last beyond 2028 and DDR5 becoming a major repurposing opportunity over the next 12 to 24 months. GPU repurposing is also expected to be a major growth area, with higher technical complexity and value.