Feb. 17, 2016

Russel Metals Posts 2015 Loss

Russel Metals reported a net loss of $88 million in 2015, driven by a non-cash impairment charge of $125 million. The result was a reversal of the $125 million in earnings in 2014.

Russel had been profitable until the fourth quarter, when the Mississauga, Ontario, company reported a loss of $135 million. Weakness in the energy markets and a decline in steel prices, combined with inventory write-downs, contributed to the loss. In fourth-quarter 2014, Russel reported earnings of $31.1 million.

Russel’s fourth-quarter sales of $673.0 million were down 33.6 percent from the same period in 2014, the product of weaker demand and lower prices. Full-year revenues declined 19.6 percent to $3.1 billion.

“The weakness in steel prices lasted longer and was deeper than we expected,” said CEO Brian Hedges. “Steel prices declined for most of 2015, falling below our cost in the fourth quarter and triggering inventory write-downs. Mill price increases in early 2016 lead us to believe that steel prices should stabilize in 2016.”

In the fourth quarter, service-center sales of $326 million declined 19 percent compared with the prior-year period. Tons shipped were down 14 percent and selling prices fell 6 percent. Uncertainty caused by the severe decline in oil prices spilling over into supporting industries contributed to the decline, the company said.

Energy products segment revenue declined 43 percent during the quarter to $274 million, while the company’s steel distributors segment also dropped 43 percent to $72 million.

“The decline in energy prices and exploration activity has impacted both the energy and steel industries. Late in 2015, select oil sands producers announced the deferral of additional phases of new or existing projects. If this continues, it will further impact activity levels in the sector,” Hedges said.
 

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Monday, December 18, 2017