NEW YORK Encore Wire Corp.s net income tumbled in 2012 on lower building wire prices and fewer sales.
The McKinney, Texas-based wire producer reported net income of $19.8 million in 2012, down 60.5 percent from $50.1 million a year earlier, on sales that fell 9.2 percent to $1.07 billion from $1.18 billion.
"Lower prices for building wire sold in the year accounted for most of the decrease in net sales, decreasing 10.4 percent per copper pound vs. the same period in 2011," Encore said.
Fourth-quarter of $5.2 million plunged nearly 68 percent from $16.3 million in the same year-ago quarter, despite a 3.9-percent rise in sales to $258 million from $248.3 million.
"The fourth quarter of this year was another fairly steady volume quarter, considering the time of the year and the current economic and construction industry environment," president and chief executive officer Daniel Jones said in a statement.
"As we have previously noted, one of the key metrics to our earnings is the spread between the price of wire sold and cost of raw copper purchased in any given period. Relatively small movements in the spread can affect our earnings per share ... spreads were down 17 percent in the fourth quarter of 2012 vs. the fourth quarter of 2011, and down 9.4 percent on an annual basis in 2012."
Encore is optimistic about demand this year, as most of its electrical distributor customers have lean inventories.
The companys aluminum wire building plant in Texas began to produce wire in the fourth quarter, with aluminum wire accounting for 3.6 percent of net sales for the year.
Encore plans to expand its distribution of aluminum wire to all sales representatives and customers in the first quarter, and expects to see sales of these products increase gradually over the course of 2013.