Oct. 31, 2012
Russel’s Earnings Dip Modestly in Third Quarter
Russel Metals Inc., Mississauga, Ont., reported earnings of $23 million during the company’s third quarter, an 11 percent decline from the same period in 2011. For the year to date, Russel’s net earnings totaled $78 million, 13.3 percent behind last year.
Russel’s net sales in the third quarter totaled $713 million, 1.1 percent better than last year’s third quarter. For the first three quarters, the company’s revenues totaled $2.2 billion, 12.7 percent greater than the same period last year.
“All of our segments experienced margin pressure in the third quarter as steel prices declined due to lack of demand. The energy segment was able to produce stronger operating results due to higher volumes; however, our other segments were impacted by industry-wide lower shipments. We continue to outpace industry shipments in our metals service center operations," said Brian R. Hedges, president and CEO.
Revenues in the company’s metals service center segment decreased 2 percent to $382 million in the third quarter, compared to the 2011 third quarter, on decreased demand levels and pricing. Gross margins in this segment were 20.1 percent, slightly lower than the 20.6 percent in third-quarter 2011.
Revenues in the energy tubular products segment increased 12 percent to $249 million due to increased shipments of large-diameter line pipe in Russel’s U.S. operations and strong demand in operations servicing the Alberta oil sands. Segment gross margins were down to 13.4 percent in the 2012 third quarter, compared to 14.3 percent in the 2011 third quarter, due to competitive pricing pressure and lower margins experienced on the higher volume line pipe orders. The strong activity in these operations resulted in operating profits for the 2012 third quarter increasing by 5 percent to $16 million, company officials said.
Revenues in the steel distributors segment decreased 12 percent in the third quarter to $78 million. Gross margins in this segment were down 1.5 percentage points to 13.0 percent.