Nucor Reports 2nd Quarter, First Half Results
07/24/2009 - Nucor reports a consolidated net loss of $133.3 million on consolidated net sales of $2.48 billion for the second quarter, and a consolidated net loss of $323.0 million on consolidated net sales of $5.13 billion for the first six months of 2009.
Nucor Corp. announced a consolidated net loss of $133.3 million on consolidated net sales of $2.48 billion for the second quarter, and a consolidated net loss of $323.0 million on consolidated net sales of $5.13 billion for the first six months of 2009.
Second Quarter Results—The $133.3 million consolidated net loss ($0.43 per diluted share) compares to net income of $580.8 million ($1.94 per diluted share) in the year-ago second quarter, and represents a 30% improvement compared to a net loss of $189.6 million ($0.60 per diluted share) in the previous quarter (1Q09).
Results include a substantially greater burden (vs. the first quarter) from the accelerated consumption of high-cost pig iron inventories. The company said that it expects the overhang from the high-cost pig iron to continue impacting results through the third quarter. The raw material destocking process could be accelerated (with a corresponding improvement in earnings) if order entry and operating rates continue to improve destocking process would be accelerated with.
Consolidated net sales of $2.48 billion reflect a 7% decrease compared with consolidated net sales of $2.65 billion in the previous quarter (1Q09) and a 65% decrease compared with $7.09 billion in the year-ago second quarter. Average sales price per ton decreased 16% from the previous quarter (1Q09) and decreased 34% from the year-ago second quarter. Total tons shipped to outside customers, 4,116,000 tons, represent an 11% increase over the first quarter of 2009 and a 47% decrease from the year-ago second quarter.
The average scrap and scrap substitute cost per ton used in the second quarter of 2009 was $312, a 6% decrease compared with $333 in the previous quarter and a 32% decrease from $456 in the year-ago second quarter.
Nucor recorded a $125.0-million credit to value inventories using the LIFO accounting method in the second quarter, which compares with a $105.0 million LIFO credit in the previous quarter and a $214.0 million LIFO charge in the year-ago second quarter.
Overall steel mill utilization reached 46% compares to utilization of 45% in the previous quarter (1Q09) and utilization of 95% in the year-ago second quarter.
Total energy costs decreased approximately $4 per ton from the previous quarter due to decreased energy costs driven by lower natural gas prices and a slight increase in overall utilization. Total energy costs reflect an approximately $5 per ton increase from the year-ago second quarter as a result of decreased utilization.
At The David J. Joseph Co., total volumes in the second quarter (both scrap processing and brokerage) were approximately 50% of the prior year. In both cases, however, the volumes improved each month, indicating a strong start to the third quarter.
Six Month Results—The $323.0 million consolidated net loss ($1.03 per diluted share) compared with net earnings of $990.5 million, or $3.36 per diluted share, in the first half of last year.
The $5.13 billion consolidated net sales represent a 57% decrease compared with consolidated net sales of $12.06 billion in last year's first half. Average sales price per ton decreased 23% while total tons shipped to outside customers decreased 45% from the first half of 2008.
The average scrap and scrap substitute cost per ton used in the first half of 2009 was $322, a 19% decrease from $396 in the first half of 2008.
Nucor recorded a $230.0 million credit in the first half to value inventories using the LIFO accounting method, which compares with a $283.0 million LIFO charge in the first half of 2008.
Utilization rates of 46% in the first six months compare to utilization of 94% in the first half of 2008. Monthly steel mill utilization rates increased each month during the second quarter, improving from 38% in April to 54% in June. This improvement reversed the first-quarter trend in which utilization rates decreased each month.
Total energy costs reflect an approximately $8 per ton increase from the first half of 2008 as a result of decreased utilization during the period.
Outlook—The company said that the third quarter outlook suggests that, in spite of the continued strong negative impact of finishing up the high-cost pig iron inventories, we should see further earnings improvement in the quarter. The company cautioned, however, that economic uncertainty is still very high.
In addition, conditions continue to be challenging in the company’s downstream businesses, where recovery is expected to lag Nucor's other businesses.
The company said it currently is concerned that the marginal uptick in orders is not representative of an increase in ‘real’ demand but more a result of both inventory adjustments and concern over rising prices. The company also said it would provide quantitative guidance after the midpoint between quarterly earnings releases.
Nucor and affiliates manufacture steel products, with operating facilities primarily in the U.S. and Canada. Products produced 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, through DJJ, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is the largest recycler in North America.
