Oct. 26, 2016

SDI Reports Strong Quarter

Steel Dynamics, Inc., Fort Wayne, Ind., reported net income of $157.4 million in the third quarter, more than doubling its earnings from the same period in 2015, and up 10.8 percent from the previous quarter. For the year to date, the minimill reported net earnings of $362.1 million, a 194.6 percent increase from the first three quarters of 2015.
 
SDI’s net sales in the third quarter totaled $2.10 billion, an increase of 7.7 percent from third-quarter 2015 and up 3.8 percent from the prior quarter. Year-to-date sales of $5.87 billion were down 2.2 percent from 2015.

"During the third quarter, positive momentum in flat-roll metal spread expansion resulted in improved sequential consolidated operating earnings, which increased 11 percent to $284 million," said Mark D. Millett, president and CEO. "The domestic steel demand outlook is relatively unchanged, with the heavy equipment, agricultural and energy markets remaining weak, while automotive continues to be strong and construction continues to improve.”

The company shipped 2.1 million tons of steel products in the third quarter, a modest improvement from last year’s third quarter, but a decline from both the first and second quarters of 2016. Year-to-date shipments totaling 6.5 million tons were up 10.0 percent from 2015.

Third-quarter operating income attributable to the company's sheet products increased 29 percent. Operating income from long products decreased 34 percent. Aside from the construction sector, demand for long products is generally challenged, and selling values are under pressure from excess domestic production capability, SDI executives said.

SDI’s steel production utilization rate dipped to 85 percent in the third quarter, down from 95 percent in the prior quarter, but still compared favorably to an industry average around 70 percent.

"Steel customer inventory levels remain lower than historical levels and year-over-year steel imports have declined approximately 20 percent," said Millett. "However, there has been buyer hesitancy in anticipation of possible declines in scrap pricing, with an expectation that this might further pressure steel prices. Additionally, we are heading into a seasonally lower demand environment and customers are hesitant to significantly increase inventories before the end of the year.”

Commenting on next year, Millett said: “Although domestic automotive production may be coming off record levels, we believe 2017 automotive steel consumption will be steady, with Mexico growing production. There will be additional growth in the construction sector, especially for larger, public sector infrastructure projects. We could also see some improved activity within the energy sector next year,” he added.


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Monday, October 23, 2017