NEW YORK Nucor Corp.s net income fell sharply in the second quarter compared with the same period last year due to weakness in the steelmakers steel sheet segment as pricing fell to multiyear lows.
Net income attributable to Nucor shareholders totaled nearly $85.15 million for the three months ended June 29, down 24.2 percent from $112.3 million a year earlier but in line with $84.8 million in the first three months of this year, the Charlotte, N.C.-based steel producer said July 18.
Net sales of $4.67 billion were down 8.6 percent from $5.1 billion a year ago but 2.5 percent higher than $4.55 billion in the first quarter of this year.
Nucor had previously projected second-quarter net income of between 25 and 30 cents per share, largely due to declines in the sheet and structural markets partially offset by stronger plate and raw material sectors (amm.com, June 13). Actual results came in at 27 cents per share.
Looking ahead, the company said it expects to see "modest" improvement in the third quarter. "We also expect to see increased earnings from our downstream businesses in the third quarter, continuing the upward trend observed in the second quarter. Our David J. Joseph operations are expected to benefit from the bottoming of scrap pricing in the second quarter."
Nucor said its weaker second-quarter results were largely due to weakness in the steel sheet sector, particularly as sheet pricing fell in June to its lowest level since November 2010, although it has since rebounded somewhat. "Margins on sheet steel have followed a similar trend and are slowly recovering from the lows in the second quarter," the company said. "The automotive and energy markets remain strong, while the construction market remains challenged."
Bright spots remained in other steel segments, however, including the companys joists and deck, building systems and reinforcing bar fabrication products. The steel products segment as a whole returned to profitability in the second quarter after a modest loss in the first quarter.
Nucor said it saw a "significant improvement" in its raw materials segment quarter on quarter after improved performance at its Trinidad direct-reduced iron facility that experienced an unplanned 18-day outage in the previous quarter.
In its raw materials segment, the company said that its scrap and scrap substitute costs averaged $377 per ton in the second quarter, slightly lower than $379 in the first quarter and 11.7 percent below $427 per ton in the second quarter of 2012.
Total steel mill shipments in the quarter fell 3.4 percent compared with a year ago and 1 percent from the first three months of this year, while downstream steel product shipments to outside customers fell 3.9 percent from a year ago but rose 19 percent compared with the first quarter, it said.
Second-quarter operating rates at the steelmakers mills inched up to 73 percent from 72 percent in the first quarter but were down from 76 percent in the second quarter of 2012. Steel mill utilization in the first half of the year fell to 73 percent from 77 percent a year ago, Nucor added.