NEW YORK Schnitzer Steel Industries Inc. saw net income
for its fiscal second quarter fall more than 10
percent year over year as a result of weak ferrous and
nonferrous scrap sales, as well as restructuring charges.
The Portland, Ore.-based company reported net income of $8.6
million for its second quarter ended Feb. 28, down 10.2 percent
from $9.6 million during the same quarter of fiscal 2012. Total
revenues for the quarter dropped 25.3 percent to $662.2 million
vs. $886.6 million in the same comparison
Ferrous scrap sales plummeted 27.6 percent to $443.4 million in
the second quarter, down from $612.6 million a year ago, while
nonferrous scrap sales fell 21.2 percent to $125.3 million from
$160 million in the same comparison despite an increase in
nonferrous prices. As a result, the companys overall
metal recycling business posted total sales of $576.2 million,
down 26.3 percent from $781.9 million in the same period a year
Sales in Schnitzers auto parts business was flat year
over year at $78.1 million, while its steel manufacturing
business posted a 15.7-percent year-on-year drop in sales to
The companys second-quarter performance took a direct hit
from a 20.2-percent decline in ferrous scrap export volumes,
which dropped to 842,509 long tons for the quarter from 1.05
million tons in the year-ago period. Domestic ferrous scrap
sales volumes slid 12.3 percent to 260,509 tons from 297,142
tons in the same comparison.
The decline in ferrous scrap exports came despite better price
performance for export sales when compared to domestic tags.
The company reported that average ferrous scrap selling prices
were down 14.4 percent for domestic sales at $363 per ton,
while average export sales were down 11 percent to $374 per ton
from the same quarter a year ago.
Average nonferrous scrap selling prices increased to 97 cents
per pound from 91 cents a year ago, but volumes fell 25.5
percent to 125.5 million pounds from 168.5 million pounds in
the same comparison.
Exports will continue to prove challenging as the company
expects moderate demand in April to follow weaker prices in
Chief executive officer and president Tamara Lundgren told
analysts during the companys earnings call April 3 that
higher export prices in February held for March shipments.
We can report that the higher export prices that we saw
in February did hold steady for March shipments. Domestic
prices increased significantly in March, and recent published
reports indicate a potential softening for April domestic
prices, she said. As a result, we see moderating
demand for April export shipments as the export markets watch
for the April domestic prices to settle.
Lundgren said customers worldwide are keeping low scrap stocks,
which still reflects, probably, a relatively weak
Capacity utilization and general demand from Asia and Turkey
have also softened year over year, Lundgren said.