Sims Ltd (ASX:SGM): Recycling metals long before it was cool, but reaping the benefits then and now

Long before Metallium (ASX:MTM) has made strides in the metals recycling space, there was a company called Sims Ltd (ASX:SGM) – for over a century up to now, in fact. Sims is still standing and thriving having gained over 30% this year.

Like Metallium, Sims (which is capped at over $3bn) is benefiting from the realisation that the world cannot build enough new mines to meet the world’s demand for metals. So recycling is the next best thing. But Sims is more than just recycling raw metals – it plays a much wider role in the circular economy including electronics recycling. Let’s take a closer look at this company.

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Sims Ltd (ASX:SGM): Recycling metals for decades

Sims traces its roots back to 1917, when a scrap-metal dealer named Albert Sims opened a small metal-recycling yard in Sydney, Australia. Over the decades it expanded across Australia, exporting scrap metal (notably shipping its first cargo to Japan in 1956) and grew its footprint from there.

A key point was in 2008 when it became known as Sims Metal Management when it bought American scrap metal recycler MMI (Metal Management Inc.). The company would drop the Metal Management from its name in 2019 because it was not just a scrap-metal business but had many more offerings including electronics recycling, IT asset disposition, municipal recycling and other circular economy services. At this point, the company laid out a growth plan to expand into non-metals recycling and renewable energy-adjacent sectors.

In 2025, the company still makes most of its money from ‘ferrus metal recycling’ making $4.5bn out of its $7.5bn revenue. Non-ferrous was $2.5bn and the rest was IT recycling and secondary processing. At the same time, the business is scaling with 22% growth in its other revenues. And it closed some non-performing assets including its UK metal increase.

Despite challenging global ferrous markets (steel oversupply, soft macroeconomics), the company achieved a substantial increase in “underlying EBIT” in FY25 — showing that its diversification and margin focus helped cushion the cyclical headwinds. Nonetheless, its statutory EBIT came in only half of what it was the year before, mostly because FY24 included a major gain on an asset sale. Still, the company recorded an $83.1m profit (from a loss) and paid more than double the dividend it did the year before.

Where is it headed?

It is a fascinating question. On one hand Demand for scrap metal — both ferrous and non-ferrous — remains underpinned by structural trends: growth in electric-arc-furnace (EAF) steel production, and global decarbonisation mega trends, which drive demand for recycled steel rather than virgin ore. The company itself highlighted that long-term fundamentals remain strong, with EAF capacity and scrap demand continuing to grow.

The portfolio simplification (especially the sale of its UK business) and disciplined capital allocation — investments into improving efficiency, logistics, and capacity — indicate management is positioning for more lean and flexible operations, likely to better handle commodity-price swings.

At the same time, Scrap-metal markets remain cyclical and volatile. Ferrous metal markets are influenced by global steel demand, steel-making capacity (especially EAF), and pricing pressure — these can swing widely depending on macroeconomic conditions, global steel supply (especially from countries such as China), and commodity cycles. And as we noted, the e-waste recycling segment isn’t yet big enough to offset volatile swings. And even then, the success of the e-waste segment depends on the demand for data-centre/electronics recycling.

Analysts have a target price actually lower than the current price ($14.95 vs $16.96). This is despite them expecting decent revenue growth over the coming yers from $7.5bn in FY25 to $8bn in FY26 and $8.3bn in FY27. Its bottom line is expected to grow too. It is trading at 20.8x P/E for FY26 and 15.3x for FY27.

Conclusion

Sims could be a decent long-term play if you believe in the continued global decarbonisation momentum (supporting scrap demand), and the growing relevance of e-waste and circular-economy services (supporting its SLS business).

But, as with any stocks exposed to commodities (whether metals, oil & gas, agriculture or anything else), Sims is not a set-and-forget defensive stock — you’ll need to watch global commodity cycles, macroeconomic conditions, and how well Sims executes on diversifying beyond raw-metal scrap trading.