CHICAGO Service center
operator and energy products distributor Russel Metals Inc.
recorded a narrower profit in the first quarter despite a boost
in sales as the company saw decreased demand in some sectors as
well as lower selling prices.
Russel posted net income of Canadian $21.7 million ($21.5
million) for the three months ended March 31, down 34 percent
from C$32.9 million in the same period last year, on revenue
that rose 2.4 percent to Canadian $821.8 million ($814.7
Russel attributed the revenue
improvement to its acquisition last year of oilfield equipment
distributor Apex Distribution Inc., it said in commentary
released with earnings results May 2.
Revenue by the companys
metals service center segment fell 16.1 percent from a year
earlier due to lower demand. Gross margins at its metals
service centers improved vs. the fourth quarter of 2012 but
were slightly lower than in the first three months of last
year, reflecting a leveling off of steel prices, the company
"The volume decline experienced
throughout the service center industry was also felt by Russel
Metals," president and chief executive officer Brian R. Hedges
said. "The decline in volume in the first quarter impacted most
sectors and was exacerbated by fewer working days in 2013 due
to the timing of the Easter holiday and inclement weather
following the relatively mild weather experienced in 2012."
The drop in volumes in Canada
was more severe than in the United States, reflecting "the
impact on the Canadian economy of the energy slowdown in
Alberta for both the oil sands and conventional gas drilling
activities," he said.
Russels energy products
segment saw a 42-percent jump in sales in the first quarter,
while the divisions gross margins improved from the
preceding quarter and a year earlier, the company said.
Tons shipped by Russels
service centers segment fell 10 percent from a year earlier but
were up 9 percent compared with the fourth quarter of 2012,
according to a company presentation to investors May 3. The
average selling price of metal declined 8 percent and 3
percent, respectively, in the same comparisons.
The reduction in tons shipped was a result of the economy
stalling in 2013, the company said in the presentation.