Nucor Reports 4th Quarter, Year-End Results
01/27/2010 - Nucor reports consolidated net earnings of $58.9 million on consolidated net sales of $2.94 billion for the fourth quarter and a consolidated net loss of $293.6 million on consolidated net sales of $11.19 billion for the full year 2009.
Nucor Corp. announced consolidated net earnings of $58.9 million on consolidated net sales of $2.94 billion for the fourth quarter and a consolidated net loss of $293.6 million on consolidated net sales of $11.19 billion for the full year 2009.
Fourth Quarter Results — The $58.9 million ($0.18 per diluted share) consolidated net earnings compare to net income of $105.9 million ($0.34 per diluted share) for the year-ago fourth quarter. Results reflect continuing improvement over losses of $0.60, $0.43 and $0.10 per diluted share in the first, second and third quarters of 2009, respectively.
Consolidated net sales of $2.94 billion reflect a 6% decrease compared with $3.12 billion in the previous quarter (3Q09), and a 29% decrease % compared with $4.15 billion in the year-ago fourth quarter. Average sales price per ton increased 4% from the previous quarter and decreased 35% from the year-ago fourth quarter. Total tons shipped to outside customers were 4,638,000 tons, a decrease of 9% from the previous quarter and an increase of 8% over last year's fourth quarter.
Results were significantly impacted by reduced earnings in the company’s downstream, long products and scrap businesses. The company noted, however, that its sheet mills benefited from the absence of high-cost pig iron inventories. The average scrap and scrap substitute cost per ton used in the fourth quarter was $276, a decrease of 8% compared with $299 in the previous quarter (3Q09) and a decrease of 37% from $435 in the year-ago fourth quarter.
Nucor recorded a $116.9 million credit to value inventories using the LIFO method of accounting, compared with a credit of $120 million in the previous quarter and a credit of $81.2 million in the year-ago fourth quarter.
Full-Year Results — The $293.6 million ($0.94 per diluted share) consolidated net loss compares with net earnings of $1.83 billion ($5.98 per diluted share) for 2008.
Consolidated net sales of $11.19 billion reflect a 53% decrease compared with net sales of $23.66 billion for 2008. Average sales price per ton decreased 32% while total tons shipped to outside customers decreased 30% from 2008 levels.
The average scrap and scrap substitute cost per ton used was $303, a decrease of 31% from $438 in 2008.
The company recorded a $466.9 million credit to value inventories using the LIFO method of accounting, compared with a charge of $341.8 million in 2008.
Operating Results — Overall steel mill utilization reached 58% in the fourth quarter, a decrease from 69% in the previous quarter (3Q09) and an increase from 48% in last year's fourth quarter. For the full year, steel mill utilization rates of 54% reflect a decrease from 80% for the full year 2008. The company said the quarter-over-quarter decrease in utilization was due to fourth-quarter seasonal issues that are separate of the general economic slowdown due to the holidays and year-end plant shutdowns by some customers.
Total energy costs increased approximately $3 per ton in the fourth quarter from the previous quarter due to higher natural gas prices coupled with reduced productivity. Total energy costs decreased approximately $5 per ton from the year-ago fourth quarter to the fourth quarter of 2009. For the full year, total energy costs increased approximately $1 per ton from 2008.
Pre-operating and start-up costs of new facilities decreased from $53.8 million in the year-ago fourth quarter to $48.1 million in the fourth quarter of 2009, and increased from $128.6 million in 2008 to $160.0 million in 2009. 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 noted that its liquidity position remains strong with $2.24 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 — Going forward, the company said that it believes that its most challenging markets will be those associated with residential and non-residential construction, which continue to show little, if any, strength. While the company expects improvements of approximately 5% in steel mill shipments in the first quarter, it also expects significant increases in both sales prices and scrap costs, and as a result is projecting a LIFO expense of about $25 million in the first quarter of 2010. The projected $25-million expense compares to a LIFO credit of $116.9 million in the fourth quarter of 2009 and a credit of $105 million in the first quarter of 2009.
The company said that actual first quarter earnings will be significantly impacted by these inventory valuation adjustments. The company also noted that it would provide additional and more quantitative earnings guidance after the midpoint between its 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 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.
