NEW YORK Steel
Dynamics Inc. (SDI) expects to post lower earnings for the
second quarter, with a compression in profit margins offsetting
increased sales volumes.
The Fort Wayne,
Ind.-based company provided a second-quarter earnings guidance
in a range of 10 to 14 cents per diluted share, down from 21
cents in the first three months of this year and 20 cents in
the second quarter of 2012.
overall steel shipments are expected to be slightly higher in
comparison to the first quarter as decreases in merchant bar
volume are expected to be more than offset by increased sheet
and other long product shipments, including engineered special
bar quality products and standard railroad rail," the company
said. "However, margin compression caused by declines in
average consecutive quarterly sheet and structural steel
pricing are expected to more than offset the volume
improvement, resulting in reduced profitability from the
companys steel operations."
SDI also expects to
see its metal recycling divisions financial results
decline from the first quarter "as anticipated improvement in
both ferrous shipments and margins are expected to be more than
offset by decreased nonferrous volumes and margins."
The company said that
near-term market sentiment is being influenced by anticipated
slower economic growth in China coupled with suppressed
economic growth in Europe.
uncertainty in the domestic economic environment continues to
hold consumer confidence at bay and influence customer buying
patterns," SDI said. "However, the residential construction
market is stronger, and market optimism remains in place for
improvement in nonresidential construction demand as modest
increases in key directional indices continue to show signs of
recovery from base historical lows (and) automotive and
manufacturing markets continue to be strong."