NEW YORK Nucor Corp. says it expects to see lower fourth-quarter results compared to both the previous quarter and the prior-year period due to a smaller accounting credit, as well as thinner margins in the steel sector as a whole.
The Charlotte, N.C.-based steelmaker said it expects earnings for the quarter ending Dec. 31 to be in the range of 25 to 30 cents per diluted share. That projection represents a decrease from both third-quarter earnings of 35 cents per share and 2011 fourth-quarter earnings of 43 cents per share, the company said Tuesday.
The primary factor behind the expected drop in earnings is a lower last-in, first-out (LIFO) credit of $29 million in the quarter, compared with a credit of $84 million during the third quarter, the company said.
At the same time, the overall steel sector is facing a margin squeeze, Nucor said.
"Lower steel mill margins are primarily impacting our bar and plate steel mills, reflecting the cumulative impact of high import levels and general economic uncertainty," Nucor said.
Domestic plate mills, including Nucor, have announced two rounds of $50-per-ton increases on published prices for steel plate products during the fourth quarter in an effort to boost prices amid relatively subdued demand and readily available supplies of both domestic and imported product (amm.com, Nov. 29). In mid-November, Nucor also announced plans to boost net prices on reinforcing bar, merchant bar and structural bar products by $35 per ton, effective with Dec. 1 shipments (amm.com, Nov. 12), but then opted to hold prices flat in January (amm.com, Dec. 11).
But while the companys bar and plate divisions face headwinds, Nucors sheet mills have seen the benefits of higher pricing levels, the company said.
"Sheet mill margins are improved in the fourth quarter after bottoming out in the third quarter of 2012," Nucor said.
Domestic flat-rolled steel producers have introduced three rounds of price increase announcements in the fourth quarter.