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Commercial Metals' Second-Quarter Sales Drop, But Profits Increase
03/28/2016 - U.S. recycler and long products producer Commercial Metals Co. saw its second-quarter profits increase despite a decline in sales, the company reported.
For the quarter ended 29 February, the company posted net sales of US$1.02 billion, down 27 percent from the same quarter last year. At the same time, net earnings rose 69 percent to US$10.5 million.
In a statement, the company said shipments from its steel mills and fabrication division were up and that both benefited from lower scrap and material costs. However, it said those benefits were offset by lower selling prices.
All things considered, though, it wasn’t a bad quarter, said chairman and chief executive Joe Alvarado in a statement.
“Our second fiscal quarter has historically been our weakest quarter primarily due to seasonal slowdowns during the winter months. However, we are pleased with the results for our second quarter of fiscal 2016,” he said.
Alvarado said that as the company heads into the construction season, it is expecting demand for finished steel products to improve.
“Nonresidential construction spending, which is our primary end-use market in the U.S., was up 11 percent year-over-year in February 2016. Furthermore, from a U.S. perspective, we are encouraged by the strength of the Architecture Billings Index, posting above 50 for 21 of the 24 months ended February 2016, which has historically been a leading indicator of improved nonresidential construction,” he said.
“Our order backlog remains strong. However, we expect to continue to be challenged globally by steel overcapacity in China, imports into the U.S. and Poland, and a strong U.S. dollar,” Alvarado said.
In a statement, the company said shipments from its steel mills and fabrication division were up and that both benefited from lower scrap and material costs. However, it said those benefits were offset by lower selling prices.
All things considered, though, it wasn’t a bad quarter, said chairman and chief executive Joe Alvarado in a statement.
“Our second fiscal quarter has historically been our weakest quarter primarily due to seasonal slowdowns during the winter months. However, we are pleased with the results for our second quarter of fiscal 2016,” he said.
Alvarado said that as the company heads into the construction season, it is expecting demand for finished steel products to improve.
“Nonresidential construction spending, which is our primary end-use market in the U.S., was up 11 percent year-over-year in February 2016. Furthermore, from a U.S. perspective, we are encouraged by the strength of the Architecture Billings Index, posting above 50 for 21 of the 24 months ended February 2016, which has historically been a leading indicator of improved nonresidential construction,” he said.
“Our order backlog remains strong. However, we expect to continue to be challenged globally by steel overcapacity in China, imports into the U.S. and Poland, and a strong U.S. dollar,” Alvarado said.
