Nov. 11, 2015

Russel Profitable Despite Energy Downturn

Russel Metals, Inc., Mississauga, Ontario, reported net earnings of $13 million during the company’s third quarter, a sharp decline from the $33 million profit reported in the same quarter of 2014 due in large part to the weakness in the energy market. Through three quarters, Russel’s net earnings totaled $48 million, almost half the $92 million posted through the first nine months of 2014.

Russel’s third-quarter net sales totaled $773 million, down 22.7 percent from the third quarter of 2014. For the year to date, revenues of $2.4 billion were down 15 percent from 2014.

Revenues of $369 million in the company’s metals service center segment were 11 percent lower than third-quarter 2014 due to weaker demand, primarily in Western Canada from customers supplying the oil and gas industry. Additionally, metals service center selling prices decreased by 2 percent and tons shipped decreased by 10 percent compared to the 2014 third quarter.

Third-quarter 2015 revenues in the company’s energy products segment decreased 40 percent to $300 million compared to the prior-year quarter due to reduced drilling activity in the energy sector. Operating profits decreased 67 percent to $11 million.

Quarterly revenues of $103 million in the company’s steel distributors segment were 16 percent lower than the 2014 third quarter.

“The difficult economic conditions in all three segments continued in the third quarter,” said Brian Hedges, president and CEO. “The further drop in the price of steel at the end of the quarter was greater than anticipated. During the quarter, we focused on reducing inventory levels.”

Russel’s service centers reduced inventories by $31 million during the quarter, with inventory levels reaching 4.7 turns. Steel distributors reduced inventories by $36 million, though turns remained too low, executives said. Energy inventory levels improved by $28 million in the quarter, but energy inventories remain an area of concern for company executives.


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Tuesday, October 17, 2017