PITTSBURGH Metalico Inc. posted a net loss in the first quarter, due in part to overcapacity that has plagued the entire scrap metal industry, the company said.
Cranford, N.J.-based Metalicos $1.2-million net loss was in contrast to net income of $2.2 million in the year-ago quarter on sales that fell 16.1 percent to $137.7 million.
However, the companys top executive said he was encouraged that Metalico had cut its quarterly net loss in half from the preceding quarter.
"Sequential results in the first quarter improved markedly over last years fourth quarter. The company returned to positive operating income, albeit a modest amount, signaling progress in efforts to improve results," president and chief executive officer Carlos E. Agüero said.
The company has been able to pare down its operating expenses primarily through reductions in payroll and related fringe benefits, he said. The company also is engaged in disciplined buying practices.
Overcapacity in the scrap industry, especially in shredding, has become a serious problem, Agüero said, adding that Metalico is taking a hard look at the matter. In an effort to strengthen the company as a whole, it is considering divesting, closing or swapping underperforming assets, he said.
Ferrous scrap prices are at a year-long low and appear to be at or near the bottom, but there are no signs that nonferrous prices will rebound in the near term, he said.
The bleak pricing scenario is due to weak demand from U.S. and export scrap consumers, excess finished steel capacity and imported steel offerings, the company said.
Metalico streamlined its operating segments effective Jan. 1, with its Platinum Group Metals (PGM) and Minor Metal Recycling units absorbed by its Scrap Metal Recycling unit.
Ferrous shipments reached 143,100 gross tons in the first quarter, up 4.8 percent year on year and 12.4 percent higher sequentially. Meanwhile, nonferrous shipments totaled almost 45.2 million pounds in the quarter, down 9.2 percent year on year but up 8.8 percent from the previous quarter.