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CMC Poland ops hit hard by ‘deluge’ of imports

Keywords: Tags  Commercial Metals, CMC, Barbara Smith, Joe Alvarado, earnings, first quarter, CMCZ, Zawiercie Poland

CHICAGO — Commercial Metals Co.’s (CMC’s) steel mill in Zawiercie, Poland, continues to be hit hard by a “deluge” of imports and slack demand resulting from the European economic crisis, CMC executives said Monday.

CMC Zawiercie SA (CMCZ), the Irving, Texas-based steelmaker’s Polish subsidiary, recorded adjusted operating income of just $876,000 in its fiscal 2013 first quarter compared with $9.8 million in the year-ago period, CMC chief financial officer Barbara Smith said during a conference call to discuss earnings results Monday.

CMCZ’s fiscal-first-quarter volumes declined 8.7 percent year over year to 345,000 tons, while sales margins slid 2.2 percent to $223 per ton in the same comparison, Smith said. Billet production, which the company often turns to during “flat times,” also fell sharply, she added.

“This segment continues to be affected by the unsettled eurozone crisis and import pressures from neighboring geographies,” Smith said.

An influx of imports to the Polish market, mostly from new mill startups in Eastern Europe, started having an impact about a year ago, CMC chairman, president and chief executive officer Joseph Alvarado said. “All of our domestic competitors in Poland were impacted by this deluge of imports,” Alvarado said. “We continue to lobby for ... ‘fair trade’ in Poland, but we’re still seeing import pressure.”

A combination of a slow government response to the trade issue and slack demand has put pressure on all mills in Poland, Alvarado said. But while imports could “abate with government support,” CMCZ must still contend with a seasonally weak period that usually comes with winter weather in Poland, he said.

CMC executives in general suggested that they were disappointed by results from overseas operations.

“We continue to face economic challenges in most of the international markets,” Alvarado said. The company’s operations in Poland in particular are “struggling and need to improve,” he said. And in Australia, CMC has been hit by a “general malaise,” he said.

“We’ve invested recently in both of those areas, and we want to capitalize on the investments that we’ve made,” Alvarado said.

CMC recorded overall net income of $49.7 million for the three months ended Nov. 30 (, Jan 7).

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