Russel's Revenues Slip in Second Quarter
By Metal Center News Staff
on Aug 16, 2019
Russel Metals reported net revenues of $937 million in the second quarter, a decline of 4.2 percent compared with the same quarter in 2018. First-half revenues for the Canadian service center company were up 3.1 percent to $1.97 billion.
Net income for the quarter totaled $31 million, less than half the $66 million income in second-quarter 2018. Year-to-date net income declined 38.1 percent to $65 million.
Gross margins in the second quarter of 18.8 percent were lower than the 24.4 percent gross margins experienced in the 2018 second quarter, largely due to the imposition of Section 232 leading to higher selling prices.
"We achieved solid second-quarter results as we navigated declining steel prices and modest demand following an exceptional 2018. The removal of North American section 232 and retaliatory tariffs in May 2019 have lowered North American prices,” said John G. Reid, president and CEO.
“It looks like flat-rolled coil prices started to bottom out in July. We’re getting back to normal metal margin spreads, but on the low end. It seems to be the sweet spot to keep imports at bay. I don’t see a lot of upside potential for it,” Reid said of pricing.
Revenues in the company’s metals service centers decreased 5 percent to $535 million for the quarter compared to the same period in 2018. Same-store tons shipped in the second quarter were approximately 7 percent lower than the second quarter of 2018. The average selling price improved 2 percent over second quarter 2018, aided by growth in value-added processing.
Revenues in the company’s energy products segment declined 7 percent to $298 million in the quarter. Steel distribution segment revenues increased 8 percent to $100 million.
“Overall demand, while lower than 2018, remained steady in all three segments. World trade uncertainty tempered manufacturing growth particularly in the agricultural, heavy equipment, transportation and construction industries,” Reid said.