NEW YORK Nucor Corp.s net income plunged nearly 42 percent in the first quarter as the steelmaker failed to experience the typical seasonal uptick in volumes and pricing.
Net income attributable to Nucor stockholders totaled $84.8 million for the three months ended March 30, down 41.6 percent from $145.1 million in the same year-ago period and 38.1 percent below the $136.9 million logged in the previous quarter, the Charlotte, N.C.-based steelmaker said April 18. Net sales dropped 10.3 percent to $4.55 billion for the period from $5.07 billion in the first quarter of 2012 but rose slightly from $4.45 billion in the fourth quarter of last year.
Nucor previously warned that it expected to record lower earnings for the quarter, pegging net income in the range of 20 to 25 cents per diluted share (amm.com, March 14). Actual results for the period came in at 26 cents per share.
A number of factors were behind the companys weaker quarterly results. On the operational side, margins at Nucors steel mills remained "flat" compared with the fourth quarter of 2012 due to the lack of traditional first-quarter improvement, the company said. Meanwhile, its downstream steel products segment experienced a seasonal slowdown, with the unit reporting a loss in the quarter after three consecutive quarters of profitability.
"Our raw materials segment also reported weaker results due to an unplanned 18-day outage at our Trinidad DRI (direct-reduced iron) facility and weather-related effects negatively impacting the flow of scrap in our scrap processing business," Nucor added.
With demand failing to log a seasonal uptick, operating rates at the companys steel mills fell to 72 percent in the quarter from 79 percent in the same period last year, but increased from the 71-percent rate recorded in the fourth quarter of 2012. Steel production dropped 8 percent year on year to 4.8 million tons during the quarter and mill shipments fell 3 percent to nearly 5.1 million tons, the company said.
At the same time, average sales prices per ton also fell 7 percent year on year and 2 percent sequentially, Nucor said.
The companys earnings were also hit by an $18-million accounting charge, it added.
Despite recent market weakness, Nucor expects to see improvement in its second-quarter results. That growth will be driven by better performance in its fabricated construction products business, including rebar fabrication and pre-engineered metal buildings, as well as its raw materials businesses and steel mill product groups, Nucor said. This will be partially offset by weaker performance in its steel sheet sector, it added.
"Import levels and general economic and political uncertainty continue to negatively affect our business," Nucor said in its second-quarter outlook. "We continue to be cautiously optimistic about non-residential construction markets in 2013 as they continue to improve slowly from historically low levels."
Meanwhile, construction on Nucors 2.5-million-per-ton DRI facility in Louisiana has been delayed slightly due to extreme weather conditions in the first quarter, the company said, noting that it now expects the operation to start up late in the third quarter.