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July 24, 2013

Nucor's Earnings Remain Flat from First Quarter
 
Nucor Corp., Charlotte, N.C., reported net earnings of $85 million during its second quarter, nearly flat with its first-quarter performance. Net earnings for the minimill company were down 24.2 percent compared to the same quarter of 2012. For the first half, Nucor’s net earnings of $169.9 million were down 34.0 percent compared to the previous year.

Nucor's second-quarter net sales totaled $4.67 billion, an increase of 3 percent compared to the first quarter, but a decrease of 8 percent from the same period in 2012. Second-quarter shipments were down 3 percent compared with the same period last year, and 1 percent compared with the previous quarter.

Nucor’s average scrap and scrap substitute cost per ton used in the second quarter was $377, a slight decrease from the previous quarter, and a 12 percent drop from the cost paid in last year’s second quarter.

Overall operating rates at Nucor’s steel mills in the second quarter averaged 73 percent, up slightly from the first quarter but down from the 76 percent in the second quarter of 2012. Steel mill utilization decreased from 77 percent in the first half of 2012 to 73 percent in the first half of 2013.

Construction is nearing completion on the 2.5-million-ton DRI facility in Louisiana. Nucor is on schedule for start-up in the third quarter. The company expects to begin hot-commissioning in August and production by the end of September.

“Given the scope of this project, start-up hiccups are to be expected. However, our confidence is extremely high in the process technology,” said John Ferriola, Nucor president and CEO. “Combining Louisiana's capacity with the two million tons of annual capacity at our existing Trinidad DRI plant will bring us to two-thirds of our long-term goal to control six million to seven million tons of annual capacity in high-quality scrap substitutes.”

Nucor is engaged in a number of other investments this year, including the addition of a normalizing line at its North Carolina plate mill; expansion of its South Carolina flat-rolled mills product portfolio to include wider and lighter-gauge sheet steel; and expanding the sheet piling products offered through Nucor-Yamato. These projects, which will be completed either this year or early in 2014, will result in much lower capital expenditures in 2014, to near maintenance levels, Nucor executives said.

In the third quarter, Nucor anticipates improvements in sheet steel pricing, which dropped to its lowest level since November 2010 in June, but has since begun to rebound. Margins have followed a similar trend and are slowly recovering from lows in the second quarter.

The automotive and energy markets remain strong, while the construction market remains challenged. Nucor expects to see increased earnings from its downstream businesses in the third quarter, continuing the upward trend observed in the second quarter. “Overall, the outlook continues to be challenged by anemic economic growth and excess global steel capacity,” said James Frias, chief financial officer.

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Thursday, July 24, 2014