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SDI expects lower earnings in 2d quarter

Keywords: Tags  SDI, Steel Dynamics Inc, second-quarter earnings, earnings guidance, steel sales, metal recycling, steel, Daniel Fitzgerald

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.

"Second-quarter 2013 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 company’s steel operations."

SDI also expects to see its metal recycling division’s 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.

"Persistent 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."

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