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Nucor sees pressure ahead as earnings slip

Keywords: Tags  Nucor, US Steel, steel, flat-rolled, raw materials, Charlotte, Catherine Ngai

NEW YORK — Nucor Corp.’s net income dipped slightly in the fourth quarter, and the company anticipates further slippage as economic uncertainty pressures future earnings results.

Fourth-quarter net income attributable to Nucor stockholders totaled $136.9 million for the three months ended Dec. 31, down 0.1 percent from $137.1 million in the same 2011 period, on net sales that fell 7.8 percent to $4.45 billion from $4.83 billion, the Charlotte, N.C.-based steelmaker reported Jan. 29.

Nucor expects first-quarter 2013 earnings to fall below fourth-quarter levels due to a reversal of an accounting credit that will result in a small charge in the first quarter.

Construction markets, although showing small improvement, remain at "historically anemic levels," Nucor said.

"High import levels, volatility in raw material costs and general economic uncertainty are all factors that could undermine our expectations," it added.

Operating rates at the company’s steel mills totaled 71 percent during the quarter, flat compared with the third quarter and the same year-ago period.

The steelmaker reported full-year net income of $504.6 million, down 35.2 percent from $778.2 million in 2011.

However, Nucor recorded a drop in energy and raw material costs, with affordable natural gas prices trimming energy costs by some $2 per ton in 2012 compared with 2011.

The average scrap and scrap substitute cost for the fourth quarter was $372 per ton, down 2.1 percent from $380 per ton in the third quarter and a decrease of 15.6 percent below the $441 per ton seen in the fourth quarter of 2011.

Raw material costs for the full year averaged $407 per ton, down 7.3 percent from $439 per ton in 2011.

Meanwhile, construction of Nucor’s 2.5-million-ton direct-reduced iron (DRI) facility in Louisiana is on schedule for start-up in mid-2013, with the majority of the equipment having arrived in 2012, the company said.

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