Aug. 17, 2016

Russel Matches 2015 2Q Earnings

Russel Metals, Mississauga, Ontario, reported net income of $16.4 million in the second quarter, flat with the same period of 2015. For the year to date, Russel’s earnings of $24.2 million were 30.7 percent behind the previous year.

Net sales in the quarter totaled $623.7 million, an 18.1 percent decline from the second quarter last year, and a small decline from the first quarter. Year-to-date sales of $1.29 billion were 22.8 percent behind last year’s sales through six months.

“In the second quarter, we experienced strong margin improvements in both our metals service centers and steel distributors segments due to increased prices. Although North American demand was down slightly, imports are down year over year, which supported improved pricing. Steel prices and demand for the balance of the year are expected to remain relatively flat,” said CEO Brian Hedges.

Revenues of $364 million in Russel’s metals service centers segment were 6 percent lower than in second-quarter 2015 due to lower selling prices. Tons shipped were consistent with last year’s second quarter. Gross margins improved to 22.9 percent from 18.3 percent reflecting improved steel pricing. Second-quarter 2016 service center operating profits of $24 million were almost double the $13 million reported in the same quarter last year primarily due to margin improvement.

Revenues in the steel distributors segment decreased by 23 percent to $81 million in the second quarter, reflecting lower demand. Gross margins improved to 18.5 percent from 11.0 percent, and operating profits increased 50 percent to $9 million, compared with second-quarter 2015, the company said.

Offsetting the gains in the company’s service center and distribution businesses were continued weakness in the energy sector, with low oil and natural gas prices adversely affecting the energy products and Alberta service center operations. Second-quarter revenues in Russel’s energy products segment decreased 35 percent to $176 million compared with the 2015 second quarter. Gross margins decreased from 18.4 percent to 16.4 percent due to continued pricing pressure.

“As predicted, our energy product results declined due to the low rig counts in North America and the seasonal slowdown in Canada. The market prices of pipe continued to deteriorate despite efforts of domestic producers to initiate price increases. There has been no meaningful increase in demand levels due to excess pipe in the distribution channel,” Hedges said.


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Saturday, October 21, 2017