Schnitzer Steel Industries Inc. expects weaker sequential scrap
exports to drive it to post a net loss for its fiscal fourth
quarter ending Aug. 31.
Sales prices during
the quarter fell faster than average purchase prices for
material shipped, resulting in lower margins vs. its already
weak fiscal third-quarter performance, when export volumes
dropped 19 percent from the year-ago period, the Portland,
Ore.-based company said in an outlook released Aug. 27.
For the fiscal fourth
quarter, Schnitzer expects ferrous scrap sales volumes to drop
5 to 10 percent sequentially, with average ferrous scrap
selling prices falling 8 to 10 percent.
The company expects
nonferrous scrap sales volumes to trend at levels similar to
those recorded in its fiscal third quarter, although average
nonferrous selling prices are expected to decrease about 5
Operating results will
likely to be adversely impacted by average inventory costs,
impairment charges and higher unit costs resulting from lower
anticipated volumes and a material increase in bad debt
"These factors are
expected to contribute to the metals recycling business
incurring an operating loss in the (fiscal) fourth quarter,"
Car purchase volumes
under the companys auto parts business are likely to
hover around levels seen the previous quarter, although they
should be up 5 percent from a year earlier. Operating margins
should remain positive but will fall sequentially due to the
adverse impact of average inventory accounting.
fiscal fourth-quarter results will also include about $2
million in start-up costs related to 11 new stores added to its
auto parts business this year.