NEW YORK Commercial Metals Co. (CMC) saw a sharp decrease in profits in its fiscal second-quarter 2013 on the back of slower U.S. scrap and steel business activity, but the company expects to see a pickup in domestic business in the second half.
The Irving, Texas-based steelmakers net income fell 84.1 percent year over year to $4.6 million in the three months ended Feb. 28 on revenues that declined to $1.73 billion vs. $1.96 billion in the same quarter of 2012.
Sales in the companys Americas Recycling segment fell 16.3 percent to $351.4 million over the same period a year earlier, while sales in its Americas Mills segment dropped 9.4 percent to $476.6 million in the same comparison.
The lower revenues came as steel prices and shipment volumes pulled back in the quarter. The Americas Mills divisions average f.o.b. steel selling price dropped to $682 per ton in the second quarter, compared with $726 per ton in the same period a year prior, although with scrap prices also down, the units metal margins were largely unchanged at $332 per ton vs. $334 per ton in the same quarter last year.
Meanwhile, total rebar, structural and other steel shipments from the division declined to 602,000 tons in the second quarter, down from 644,000 tons a year earlier, while the International Mill divisions shipments fell to 277,000 tons from 331,000 tons previously.
However, CMC chairman, president and chief executive officer Joseph Alvarado said he remained optimistic that construction will pick up in the second half of the year, resulting in improved earnings.
"Our third quarter historically yields better results as the construction season begins to ramp up. The American Institute of Architects reported an Architecture Billings Index (ABI) of 54.9 in February 2013, the highest level in over five and a half years," Alvarado said in a statement. "We believe that the ABI level will eventually translate into increased demand for our domestic operations."