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Nucor expects 1st-qtr. earnings drop

Keywords: Tags  steel sheet, Nucor, steelmaker, earnings guidance, DRI, auto, energy, construction catherine ngai

NEW YORK — Nucor Corp. said it expects a decline in first-quarter earnings due to a lack of seasonal improvement as well as domestic scrap flow disruptions and an unplanned outage at its direct-reduced iron (DRI) facility.

The Charlotte, N.C.-based steelmaker is projecting net income of between 20 and 25 cents per diluted share for the three months ending March 30, down from 43 cents in the fourth quarter and 46 cents in the same period last year, it said in its first-quarter guidance released March 14.

The company previously forecast that first-quarter earnings likely would fall below fourth-quarter levels due to a reversal of an accounting credit that would result in a small charge (, Jan. 29).

In addition to the estimated $16-million last-in first-out inventory charge, first-quarter earnings also will be impacted by weaker-than-expected steel market conditions, the company said.

Nucor said that the operating performance by its steel mills segment will be flat compared with the fourth quarter, with a weakened sheet steel sector offsetting improved profitability in its structural steel division.

"Overall, our steel mills have not experienced the seasonal improvement that is typical in the first quarter of the year," Nucor said, adding that its downstream steel products segment experienced a "typical seasonal slowdown in the first quarter" and likely will report a loss after three straight quarters of profitability.

The company’s raw materials segment also is expected to report weaker earnings due to an unplanned 18-day outage at its Trinidad DRI facility, as well as weather-related issues negatively impacting the flow of ferrous scrap.

Looking forward, the steelmaker said that while the energy and automotive sectors remain its strongest end markets, other segments continue to face headwinds.

"We continue to be cautiously optimistic about non-residential construction markets in 2013 as they continue to improve slowly from historically low levels," the company said. "Import levels and general economic and political uncertainty continue to negatively affect our business."

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