PITTSBURGH Metalico Inc. posted a net loss in the second quarter due to an overhang of shredded scrap and tepid demand in the export arena, which the company said it expects will linger into the fourth quarter.
The Cranford, N.J.-based scrap processor posted a net loss of $2.7 million for the three months ended June 30 in contrast to net income of $2.9 million in the same period last year, on sales that fell 12.4 percent to $129.9 million.
"We are certainly not pleased with the results, which were impacted by lower commodity selling prices across most product lines," president and chief executive officer Carlos E. Agüero said.
Scrap shipments in the quarter were in line with last yearferrous shipments of 136,200 gross tons were down 2.6 percent while nonferrous shipments of 44.3 million pounds were up 0.8 percentbut ferrous and nonferrous selling prices were down 12 percent and 9 percent, respectively.
Metalicos scrap metal recycling segment posted a second-quarter operating loss of $3.3 million vs. a $149,000 operating loss a year ago, while the lead fabrication segment posted operating earnings of $1.2 million, up 15.9 percent from $1.1 million in the same comparison.
"Sluggish demand from exporters and an oversupplied domestic shred market have impacted the price gains achieved in July 2013 and are expected to be soft into the fourth quarter," the company said. It noted that domestic steel industry utilization rates have been dampened by imports of finished steel products.
The company said new car sales are increasing the volume of vehicles being scrapped, which is keeping inflows of material at an adequate level. "Weve seen some improvement of flows into our yards but scrap is still being bid up from our buyers," Agüero said.
The company said it is planning to sell noncore assets, control costs and refinance debt as it works to improve margins and restore its profitability.