April 27, 2016

SDI Reports Improved Profits

Steel Dynamics, Inc., Fort Wayne, Ind., reported net income of $63 million in the company’s first quarter, double the earnings in the same quarter of 2015. The profitable quarter was a reversal from fourth-quarter 2015, when SDI reported a loss of $253.3 million. SDI’s first-quarter net sales totaling $1.7 billion were down 15.0 percent compared with the 2015 period, but up 9.4 percent compared to the prior quarter.

"During first-quarter 2016, positive changes in the flat-roll steel supply environment resulted in significantly improved sequential consolidated operating earnings, which increased over 175 percent to $132 million," said Mark D. Millett, president and CEO. "Flat-roll steel import levels have declined and customer inventory levels are better matched with actual demand requirements, supporting higher domestic steel mill utilization. The domestic steel demand outlook is relatively unchanged and steady, with the heavy equipment, agricultural and energy markets remaining weak, while automotive continues to be strong and construction recovers.”

First-quarter 2016 operating income for the company's steel operations increased 104 percent to $136 million, based on a 17 percent improvement in shipments as volumes increased at each of the company's steel locations. However, average steel product pricing declined more than raw material scrap costs, resulting in steel metal spread compression. The average selling price for the company's steel operations decreased $40 to $574 per ton. The average ferrous scrap cost per ton melted decreased $21 to $184 per ton.

First-quarter 2016 operating income attributable to the company's sheet products increased over 180 percent when compared to the prior quarter. Although metal spreads declined, the company's flat-roll shipments increased 20 percent, which more than offset the margin reduction. Operating income from long products increased 46 percent, as shipments improved 9.0 percent.

The company's steel production utilization rate in the first quarter was 88 percent, up from 73 percent in the sequential quarter and considerably better than the domestic industry utilization rate of only 71 percent.

"Steel customer inventory levels have moderated and import levels have declined," said Millett. "When combined with steady underlying steel demand, the result has been some improvement in domestic steel producer utilization. Yet industry utilization still remains below historical performance due to the issue of unfairly traded steel imports.”


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Monday, December 18, 2017