Aug. 8, 2012
Russel Metals Reports Profitable Quarter
Russel Metals Inc. reported second-quarter earnings of $23 million, down almost 25 percent from the same period in 2011. The profits also trailed the $33 million posted by the Mississauga, Ont.-based service center during the first quarter.
The company’s sales totaled $719 million in the quarter, 16.1 percent better than the second quarter of 2011. Net sales were well below the $803 million in the first quarter.
Net earnings of $56 million for the first half were 12.5 percent lower than the first six months of 2011. First-half net sales of $1.5 billion were 19.2 percent better than the same period last year.
Revenues in Russel’s metals service center segment increased 11 percent to $432 million in the second quarter on stronger demand levels. Gross margins, however, were 20.4 percent compared to 23.7 percent in second-quarter 2011 as inventory holding gains experienced last year were not repeated, according to Russel President and CEO Brian Hedges.
The 2012 second quarter also included earnings arising from the acquisitions of Siemens Laserworks and Alberta Industrial Metals, both of which were immediately accretive.
Revenues in the company’s energy tubular products segment for the second quarter of 2012 increased 32 percent to $192 million as a result of large line pipe orders in U.S. operations and strong demand in operations servicing the Alberta oil sands. These large orders have lower gross margin percentages and thus margins in the segment were down to 13.9 percent in the 2012 compared to 16.2 percent in in 2011, Russel officials said.
Revenues in the steel distribution segment increased 11 percent in the 2012 second quarter to $92 million. Gross margins in this segment were down to 13.9 percent from second-quarter 2011. Currently, the steel market is experiencing tighter margins due to softening domestic prices in an extremely volatile world economy, officials said.
Russel plans to expand its value-added service center offerings later this year through the addition of stretcher levelers to its cut-to-length equipment in Ontario and Manitoba. Also, the company will upgrade its cut-to-length line at Arrow Steel Processors facility in the Port of Houston.