Russel’s Earnings Improve in Second Quarter
Russel Metals Inc., Mississauga, Ont., reported improved second-quarter 2011 earnings of $31 million on revenues of $619 million during its recent conference call with analysts and investors. This compares to earnings of $25 million on revenues of $507 million in second-quarter 2010. (Editor’s note: figures are in Canadian dollars.)
Russel’s net earnings for the six months ended June 30 improved by 89 percent to $64 million on revenues of $1.3 billion, up from earnings of $34 million on revenues of $1.0 billion for the same period in 2010.
"In light of some softness in steel pricing, we are very pleased with the second-quarter results,” said Brian R. Hedges, president and CEO. “Margins in the quarter held up very well in the metals service centers and steel distributors segments. Results in our energy segment were lower than expected due to the extremely wet conditions in Western Canada, which restricted drilling activities. We expect this segment to have a pickup in the third quarter."
Revenues in Russel’s metals service centers business increased 24 percent to $388 million for the second quarter vs. the year-ago period. Operating profits of $33 million significantly exceeded 2010 profits of $19 million. Operating profits for the segment were down slightly from the 2011 first quarter, however, due to declining steel prices and lower margins, the company reported.
Revenues in the energy tubular product segment increased 12 percent to $145 million for the second quarter, compared to the 2010 second quarter. Operating profits of $11 million equaled those of 2010. An unusually wet spring in the Canadian oil country delayed the start of the spring drilling season, adversely affecting Russel’s operations, while other operating units in this segment experienced improved volumes.
Russel’s steel distributor segment saw a 35 percent increase in revenues for the second quarter to $83 million. Operating profits increased 55 percent to $10 million, a result of stronger margins due to rising prices and volume increases.
“During the quarter, we renewed and extended our syndicated bank facility to 2014 at favorable rates. The extension of our bank facility to a three-year term positions us to continue to capitalize on growth opportunities during that period," said Marion Britton, vice president and chief financial officer.