.gif?width=220&height=200&mediaprotectionhash=b13da841472e6e7ed500ee35df2a350aaf53d75246118b33ea2095cc7e9a3fc4&ext=.gif)
Nucor 2015 Profits Fall; Underperforming Joint Venture Contributes to 4Q Loss
01/29/2016 - U.S.-based Nucor Corp. saw its 2015 profits fall 39 percent on account of lower prices and declining shipments.
On the year, the company reported net earnings of US$496.1 million, down from US$815.8 million in the previous year. The decline reflects a drop in sales, which fell 22 percent to US$16.4 billion.
The company produced 19.3 million tons of steel during the year, 9 percent less than it did in 2014. Its mills also shipped less, as volumes fell 10 percent to about 19.9 million tons, down from nearly 22 million tons in 2014.
On the quarter, which ended 31 December 2015, the company posted a net loss of US$62 million.
Earnings were impacted by fourth-quarter impairment charges related to its Italian long products joint venture, Duferdofin Nucor, and a write-off of equipment and engineering work related to its now-shelved blast furnace project in Louisiana.
The company said the Duferdofin impairment charge, which amounted to US$153 million, was tied to recent operating performance and near-term financial projections there.
In August, Nucor CFO James D. Frias told investors that the joint venture was performing terribly and that the company took a “black eye” on the investment, according to American Metal Market.
But Nucor doesn’t appear ready to throw in the towel.
“The team at Duferdofin Nucor S.r.l. has been working extremely hard at implementing new strategies that impact every aspect of its business. The core initiatives of these strategies are a relentless focus on production efficiency and cost reduction; a shift in product mix to increase shipments of value-added products such as engineered bar that have higher margins; and implementing and maintaining a progressive safety and environmental culture. We are already seeing positive results from these initiatives and believe the joint venture is positioning itself for profitability in the future,” the company said in a statement.
Nucor holds a 50 percent stake in the joint venture.
Nucor also wrote off US$84.1 million in equipment and engineering work for its now-shelved blast furnace in Louisiana. The company said it took the step because of a design change.
Company spokeswoman Katherine Miller told The (Baton Rouge, La.) Advocate newspaper that the decision reflects a change in technology.
She said technological advances that have been made since the blast furnace was first proposed have made the equipment it was planning to use outdated.
“Therefore, we no longer expect to use the previous plans or related equipment,” Miller told the newspaper.
But that’s assuming the Nucor moves forward on the project. It’s shelved, although it’s not completely off of the table, either, Miller told the newspaper.
The company produced 19.3 million tons of steel during the year, 9 percent less than it did in 2014. Its mills also shipped less, as volumes fell 10 percent to about 19.9 million tons, down from nearly 22 million tons in 2014.
On the quarter, which ended 31 December 2015, the company posted a net loss of US$62 million.
Earnings were impacted by fourth-quarter impairment charges related to its Italian long products joint venture, Duferdofin Nucor, and a write-off of equipment and engineering work related to its now-shelved blast furnace project in Louisiana.
The company said the Duferdofin impairment charge, which amounted to US$153 million, was tied to recent operating performance and near-term financial projections there.
In August, Nucor CFO James D. Frias told investors that the joint venture was performing terribly and that the company took a “black eye” on the investment, according to American Metal Market.
But Nucor doesn’t appear ready to throw in the towel.
“The team at Duferdofin Nucor S.r.l. has been working extremely hard at implementing new strategies that impact every aspect of its business. The core initiatives of these strategies are a relentless focus on production efficiency and cost reduction; a shift in product mix to increase shipments of value-added products such as engineered bar that have higher margins; and implementing and maintaining a progressive safety and environmental culture. We are already seeing positive results from these initiatives and believe the joint venture is positioning itself for profitability in the future,” the company said in a statement.
Nucor holds a 50 percent stake in the joint venture.
Nucor also wrote off US$84.1 million in equipment and engineering work for its now-shelved blast furnace in Louisiana. The company said it took the step because of a design change.
Company spokeswoman Katherine Miller told The (Baton Rouge, La.) Advocate newspaper that the decision reflects a change in technology.
She said technological advances that have been made since the blast furnace was first proposed have made the equipment it was planning to use outdated.
“Therefore, we no longer expect to use the previous plans or related equipment,” Miller told the newspaper.
But that’s assuming the Nucor moves forward on the project. It’s shelved, although it’s not completely off of the table, either, Miller told the newspaper.
