May 10, 2017

Profits Up in All Segments for Russel

Russel Metals, Inc., Toronto, reported net income of $30 million on sales of $804 million (Canadian) in the first quarter, up from sales of $662 million and income of $8 million in last year’s first quarter. A stronger pricing environment led to higher gross margins and improved operating profits in all three operating segments, the company reported.

First-quarter revenues in Russel’s metals service center segment increased 13 percent to $386 million as it shipped 2 percent more tons at an average selling price 11 percent higher than in the same period in 2016, reflecting mill price increases, higher activity levels and continued growth in value-added processing. Operating profits as a percentage of revenues doubled to 5.6 percent due to stronger gross margins.

First-quarter revenues in Russel’s energy products segment increased 37 percent to $339 million, compared with last year’s first quarter, due to stronger drilling activity and higher pipe prices as oil and natural gas prices stabilized late in 2016. The energy segment had operating profits of 7.0 percent, up from to 2.7 percent in first-quarter 2016.

Revenues in Russel’s steel distributors segment increased by 7 percent to $78 million in the first quarter reflecting higher steel prices. Operating profits rose to 10.8 percent of revenues, up about 1 percent from last year’s first quarter, due to the stronger gross margins.

"Our first-quarter results are significantly better this year. Our operating teams across the business leveraged higher 2017 steel prices, which were largely the result of improvements in steel mill outlook, stronger demand and the easing of imports. Stable oil prices resulted in increased drilling activity and, just as importantly, the inventory overhang in the North American market was substantially reduced," said Russel CEO Brian Hedges.

“We continue our disciplined approach to inventory management, efficiency gains and growth of our value-added processing. These factors all contributed to our strong first-quarter gross margins and operating profits. The increase in revenues was encouraging as it reversed the two-year trend. Our energy products operations reduced their aged inventory position, thereby improving the quality of our working capital in the segment," added President and COO John Reid.


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Tuesday, December 12, 2017