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SDI forecasts lower earnings in 3d qtr.

Keywords: Tags  Steel Dynamics, SDI, earnings outlook, third quarter earnings, consumer confidence, steel shipments, SBQ, recycling scrap

CHICAGO — Steel Dynamics Inc. (SDI) expects its earnings to tumble in the third quarter as global economic and political uncertainty continues to wallop consumer confidence.

The Fort Wayne, Ind.-based steelmaker said Tuesday that it had forecast third-quarter earnings in the range of 1 to 5 cents, down from 20 cents per diluted share in the second quarter and 19 cents per diluted share in the third quarter of 2011.

Lower consumer confidence will likely lead to reduced third-quarter steel shipments, SDI said. Special bar quality (SBQ) operations are expected to be particularly hard hit as SBQ buyers destock inventories, the company added.

In addition, SDI predicted impairment charges of between $5 million and $9 million, or 1 cent to 20 cents per diluted share, related to a decision to terminate two small joint ventures. However, the biggest drag on earnings is expected to be related to refinancing activities of $27 million, or 7 cents per diluted share, SDI said.

But the company said its recycling business should see better financial results in the third quarter compared with the second quarter thanks to improved metal spreads. And while non-residential construction markets remain weak, fabrication operations are also expected to show improved profitability in the third quarter, it added.

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