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Nucor Reports 3rd Quarter Results
10/23/2009 - Nucor reports a consolidated net loss of $29.5 million on consolidated net sales of $3.12 billion for the third quarter and a consolidated net loss of $352.5 million on consolidated net sales of $8.25 billion for the first nine months of 2009.
Nucor Corp. announced a consolidated net loss of $29.5 million on consolidated net sales of $3.12 billion for the third quarter and a consolidated net loss of $352.5 million on consolidated net sales of $8.25 billion for the first nine months of 2009.
Third Quarter Results — The $29.5 million consolidated net loss ($0.10 per diluted share) represents a 78% improvement compared to a net loss of $133.3 million ($0.43 per diluted share) in the previous quarter (2Q09), and compares to net income of $734.6 million ($2.31 per diluted share) in the year-ago third quarter.
Consolidated net sales of $3.12 billion represent a 26% increase compared with consolidated net sales of $2.48 billion in the previous quarter and a 58% decrease compared with consolidated net sales of $7.45 billion in the year-ago third quarter. Average sales price per ton increased 1% from the previous quarter and decreased 45% from the year-ago third quarter. Total tons shipped to outside customers were 5,114,000 tons, representing a 24% increase over the previous quarter and a 24% decrease from the year-ago third quarter.
The average scrap and scrap substitute cost per ton used was $299, a 4% decrease compared with $312 in the previous quarter and a 44% decrease from $533 in the year-ago third quarter.
Nucor recorded a $120-million credit to value inventories using the last-in, first-out (LIFO) method of accounting, which compares with a $125-million credit in the previous quarter and a $140-million charge in the year-ago third quarter.
Total energy costs decreased approximately $9 per ton from the previous quarter due to lower electricity and natural gas prices combined with the productivity benefits of increased utilization. Total energy costs decreased approximately $8 per ton from the year-ago third quarter.
Results include a burden (approximately $180 million, or about $0.37 per share after-tax) from the accelerated consumption of high-cost pig iron inventories that were purchased prior to the collapse in the economy.
Third-quarter pre-operating and start-up costs of new facilities were $47.1 million, which compares to $29.7 million in the year-ago third quarter. In 2009, these costs primarily related to the SBQ mill in Memphis, Tenn.; the Castrip(®) project in Blytheville, Ark.; the proposed iron-making facility; and the galvanizing line in Decatur, Ala.
Nine Month Results — The $352.5 million consolidated net loss ($1.12 per diluted share) compares with net earnings of $1.73 billion ($5.70 per diluted share) in the first nine months of 2008.
The $8.25 billion consolidated net sales represent a 58% decrease compared with consolidated net sales of $19.51 billion in last year's first nine months. Average sales price per ton decreased 32% while total tons shipped to outside customers decreased 38% compared to the first nine months of 2008.
The average scrap and scrap substitute cost per ton used was $312, a 29% decrease compared to $439 in the first nine months of 2008.
Nucor recorded a $350-million credit to value inventories using the LIFO method of accounting in the first nine months, which compares to a $423-million charge in the first nine months of 2008.
Total energy costs increased $2 per ton in the first nine months as compared with the first nine months of 2008.
Results include a burden (approximately $420 million, or more than $0.85 per share after-tax) from the accelerated consumption of high-cost pig iron inventories that were purchased prior to the collapse in the economy. Consumption of the high-cost pig iron inventories was completed by the close of the third quarter.
Pre-operating and start-up costs of new facilities reached $111.9 million in the first nine months as compared to $74.8 million in the first nine months of 2008. In 2009, these costs primarily related to the SBQ mill in Memphis, Tenn.; the Castrip(®) project in Blytheville, Ark.; the proposed iron-making facility; and the galvanizing line in Decatur, Ala.
The company said its liquidity position remains strong with $2.22 billion in cash and cash equivalents and short-term investments and an untapped $1.3 billion revolving credit facility that matures in November 2012.
Outlook — While overall steel mill utilization increased from 46% in the second quarter to 69% in the third quarter, Nucor said the increase was primarily due to the end of customer destocking. The company’s view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. The company also continues to believe that real demand is in for a long, slow recovery.
Against the backdrop of seasonal fourth-quarter issues (related to the holidays and year-end plant shutdowns by some customers), the company anticipates the benefits from significant improvements in raw material costs could be offset by the potential of lower operating volumes/rates in both sheet and bar products. Nucor said customers are currently taking advantage of shortened mill lead times, which further complicates forecasting volumes for the fourth quarter.
The company plans to provide quantitative guidance after the midpoint between earnings releases.
The company plans to provide quantitative guidance after the midpoint between earnings releases.
Nucor and affiliates are manufacturers of 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, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
