May 11, 2016
Russel Metals Reports Profitable Quarter
Russel Metals, Mississauga, Ontario, reported net income of $7.8 million in the company’s first quarter, less than half its earnings from the same period in 2015. However, the profitable quarter was a turnaround from the $135.3 million loss posted in the prior quarter.
Net income in the prior quarter totaled $662.1 million, a 26.8 percent decrease from first-quarter 2015. Compared with the prior quarter, income declined 1.6 percent.
"While we are not completely out of the woods yet, it was encouraging to see the results of our service centers and steel distributors start to improve as steel prices rose in the first quarter. Energy remains a challenge as rig counts in Canada and the U.S. are at record low levels and have yet to find a bottom,” said Brian R. Hedges, CEO. “We have, however, remained profitable in our energy products segment due to the cost and net asset reduction actions taken."
Revenues of $341 million in the company’s service center segment were 15 percent lower than in the first quarter of 2015 due to lower selling prices and weaker demand, particularly in Western Canada. Tons shipped by the company’s service centers declined 5 percent, while selling prices were down 11 percent. First-quarter operating profits in the segment totaled $10 million, down from $15 million in 2015.
First-quarter revenues in the company’s energy products segment decreased 35 percent to $248 million due to lower drilling activity and fewer projects caused by the weaker oil and natural gas prices. Management cut operating costs by 19 percent leading to an operating profit of $7 million, down from $21 million in the same quarter last year.
Revenues in the steel distributors segment decreased 39 percent to $73 million in the 2016 first quarter, reflecting lower steel prices and demand. Operating profits totaled $7 million, compared to $6 million in the same quarter last year.
"Our operating income has improved in each month since the start of the year, and we believe the second-quarter results will be better in service centers and steel distributors if, as expected, steel prices hold up. Our results are expected to be down slightly from the first quarter in the energy products segment due to low demand levels and normal slowdown due to spring breakup,” Hedges said.