CHICAGO Nucor Corp.s profits surged 72.7 percent in the second quarter on stronger sales, with the steelmaker upbeat on the third quarter due to higher steel sheet and plate prices and improving nonresidential construction demand.
Production problems at competitors helped to drive sheet steel sales volumes and profit margins higher in the quarter, the Charlotte, N.C.-based steelmaker said, adding that its bar mills benefitted from similar trends, it said July 24.
Nucor recorded net income of $147 million for the three months ended July 5 compared with $85.1 million in the year-ago quarter on sales that jumped 13.4 percent to nearly $5.3 billion.
Steel mill shipments rose 9 percent to 5.48 million tons in the quarter from 5.03 million tons a year earlier, while steel mill operating rates jumped to 79 percent from 73 percent in the same comparison.
"We currently expect to see a stronger improvement in earnings for the third quarter," Nucor said. "Although nonresidential construction markets remain at historically low levels, they are improving at a moderate pace."
Fabricated products also returned to "solid" profitability in the second quarter due to rebounding construction markets, Nucor said. The improved results came despite imports hitting the highest level since 2006 and a planned three-week outage at Nucor-Yamato Steel Co.s Blytheville, Ark., facility that cut into structural steel shipments, the company said.
But while Nucors steel mill segmentparticularly its sheet and bar millsdrove profits, its raw materials business was a drag.
Nucor suffered an operating loss at its new direct-reduced iron (DRI) plant in St. James Parish, La., in the second quarter. This was partly due to a planned three-week outage aimed at improving yield loss and conversion costs, the company said. Nucor didnt specify how much DRI the facility had lost, but expects DRI operations to improve in the third quarter and a "profitable performance" by year-end.
Also on the raw materials front, Cincinnati-based David J. Joseph Co., Nucors scrap division, recorded lower profits in the second quarter compared with the first quarter due to lower scrap selling prices, the company said.