July 23, 2014
SDI Reports More Profitable Second Quarter
Steel Dynamics Inc., Fort Wayne, Ind., reported second-quarter 2014 net income of $72 million, a 148.2 percent improvement on the same period in 2013. Compared to the first quarter, net income improved 84.6 percent. Net sales during the second quarter totaled $2.1 billion, a 16.7 percent improvement on both the previous quarter and the second quarter of 2013.
"All of our reporting segments achieved meaningfully higher profitability compared to the sequential quarter, improving beyond the negative inclement weather impact on the first quarter. Despite elevated import levels, the strength of underlying demand coupled with our continued market diversification and customer focus allowed us to achieve record quarterly steel shipments," CEO Mark Millett said during the company's quarterly conference call with investors and analysts.
Compared to the first quarter, operating income from the company's steel operations increased $50 million, driven by record shipments and better metal spreads. Sheet and structural steel volumes were the primary contributors to the improved profitability. The automotive and manufacturing markets remain strong and the energy market appears to be strengthening, as evidenced by increased demand for engineered special bar quality steels, the company said.
Additionally, modest growth in the nonresidential construction market benefited both the structural steel and fabrication operations. Compared to the first quarter, operating income from the company's fabrication operations more than doubled.
Second-quarter shipments increased across the company's platforms. The Flat Roll and Structural and Rail Divisions each achieved record quarterly shipments, as sheet steel increased 21 percent, structural steel beams increased 14 percent and rail improved 22 percent, in comparison to the first quarter. The average selling price for the company's steel products decreased $2 per ton.
For the first half of the year, SDI's net income totaled $111 million on net sales of $3.9 billion. This compares favorably to net income of $77 million on net sales of $3.6 billion last year. Year-to-date, net sales increased 8 percent.
"We continue to remain optimistic," Millett said. "We continue to have confidence that the broader U.S. economic recovery is strengthening, and that the non-service-sector portion of domestic GDP remains capable of growing at a faster rate than the overall GDP. Our organic growth projects and latent steel capacity, coupled with our planned acquisition of the Severstal Columbus steel mill, and our belief that domestic steel consumption is on the upward trend, all point toward meaningful growth."