Oct. 25, 2017

Nucor Earnings Dip in Third Quarter

Nucor Corporation, Charlotte, N.C., reported consolidated net earnings of $268.5 million for the third quarter, down from $305.4 million in the year-ago period and $323 million in second quarter 2017.

Net sales in the quarter increased 21 percent year over year to $5.2 billion. Through the first nine months of 2017, net sales were up 24 percent from 2016 at $15.16 billion. Total net earnings of $948.4 million were also higher this year, compared with $636.6 million a year ago.

The company shipped 6.6 million tons to outside customers in the third quarter, a 12 percent increase over last year but down slightly from the prior quarter. Steel mill shipments increased 18 percent year over year, and downstream steel products increased 3 percent over third-quarter 2016.

Earnings in both its steel mills and steel products segments were down significantly in the third quarter, however. The steel mills segment saw net earnings of $432.7 million, compared with $591.8 million a year ago, and steel products reported net earnings of $59.2 million in the quarter, compared with $72.6 million last year.

“Despite high utilization rates at our sheet mills, continued pressure from imports has prevented prices from keeping pace with increasing raw material costs,” said Chairman, President and CEO John Ferriola in the third-quarter earnings report. “The profitability of the downstream steel products segment in the third quarter of 2017 decreased from the third quarter of 2016 due to margin compression resulting from higher steel prices. In particular, our rebar fabrication operations have experienced significant declines in performance due to a combination of margin compression caused by higher steel prices and delays on larger, more profitable projects.”

Nucor also reported a $2-per-ton increase to steel mill energy costs from the second quarter and a $1-per-ton increase from the year-ago period, citing reduced steel production volumes and increased electricity unit costs. Total steel mill energy costs through the first nine months of the year were up $2 per ton over 2016 primarily due to higher electricity and natural gas unit costs, according to the company.

Heading into 2018, Nucor said it is encouraged by several positive factors affecting the markets it serves. “We see generally stable or improving market conditions for nonresidential construction, automotive, energy, heavy equipment and agriculture. Although illegally traded imports remain at unacceptable levels, we are encouraged by the cumulative benefits of the domestic steel industry's successful trade cases,” Ferriola said.


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Saturday, November 18, 2017