Nucor Announces Third Quarter Earnings Guidance
09/13/2007 - Nucor says it expects to report earnings in the range of $1.10 to $1.15 per diluted share for the third quarter ending September 29, 2007.
Nucor Corp. expects to report earnings in the range of $1.10 to $1.15 per diluted share for the third quarter ending September 29, 2007.
This represents historically strong earnings, consistent with second quarter results of $1.14 per diluted share, but below the record third quarter earnings of $1.70(1) per diluted share achieved last year.
Ongoing softness in the sheet markets and the increased costs for some raw materials continue to impact Nucor’s third-quarter earnings. The company says this softness continues as a result of demand softness in the automotive and residential construction markets, including appliances and HVAC. On the supply side, while the latest data suggest a strong slowing of imports in August, stubbornly high imports through the first seven months—particularly from China—continue to impact both pricing in the marketplace and customer inventories. While both imports and inventories are down significantly from their peaks, they did not fall far enough during the end of the second quarter and through the midpoint of the third quarter to support improving pricing opportunities during the third quarter.
On the positive side, the company says it sees price realizations improving during the fourth quarter on sheet and holding their own on most other mill products. However, the company expects that bar products could see some compression of margins due to the uncertainty in the market regarding the future direction of the economy and increasing woes in the residential housing, automotive and financial markets.
Nucor's earnings continued to benefit in the third quarter from its diversified product portfolio, with very strong contribution from bar, beam, and plate operations, as well as good performance from a number of its downstream businesses.
(1) On January 1, 2007, Nucor adopted FASB Staff Position AUG AIR-1, "Accounting for Planned Major Maintenance Activities," which eliminates the method that Nucor had previously used of accruing in advance for planned major maintenance activities. In accordance with this position statement, Nucor now uses the deferral method of accounting for such maintenance activities. The prior period has been adjusted to reflect the effects of applying this new accounting principle.
Nucor and affiliates manufacture steel products, with operating facilities primarily in the U.S. and Canada. Products include carbon and alloy steel bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor is North America's largest recycler.
