Nucor Reports Results for 4th Quarter, Year Ended 2011
01/27/2012 - Nucor Corp. reported consolidated net earnings of $137.1 million on consolidated net sales of $4.83 billion for the fourth quarter, and consolidated net earnings of $778.2 million on consolidated net sales of $20.02 billion for the full year 2010.
Nucor Corp. reported consolidated net earnings of $137.1 million on consolidated net sales of $4.83 billion for the fourth quarter, and consolidated net earnings of $778.2 million on consolidated net sales of $20.02 billion for the full year 2010.
Fourth Quarter Results — Fourth quarter consolidated net earnings of $137.1 million ($0.43 per diluted share) compares with a net loss of $11.4 million ($0.04 per diluted share) in the year-ago fourth quarter and net earnings of $181.5 million ($0.57 per diluted share) in the previous quarter (3Q-2011).
Nucor incurred a $51.8 million ($0.11 per diluted share) charge to value inventories using the last-in, first-out (LIFO) method of accounting, which compares to a charge of $28.0 million in the previous quarter ($0.05 per diluted share) and a charge of $23.0 million in the year-ago fourth quarter ($0.04 per diluted share).
Pre-operating and start-up costs of new facilities were $20.8 million, which compares to $17.0 million in the previous quarter and $39.0 million in the year-ago fourth quarter.
Consolidated net sales of $4.83 billion reflect an 8% decrease compared with consolidated net sales of $5.25 billion in the previous quarter (3Q-2011) and a 25% increase compared with consolidated net sales of $3.85 billion in the year-ago fourth quarter. Average sales price per ton decreased 6% from the previous quarter and increased 18% from the year-ago fourth quarter. Total tons shipped to outside customers were 5,683,000 tons, a decrease of 2% from the previous quarter and an increase of 7% over last year's fourth quarter.
The average scrap and scrap substitute cost per ton used in the fourth quarter of 2011 was $441, a decrease of 2% from $449 in the previous quarter and an increase of 23% over $359 in the year-ago fourth quarter.
Steel mill utilization rates for the fourth quarter of 2011 (71%) decreased from the third quarter (74%) and increased from last year's fourth quarter (68%). Total energy costs decreased approximately $5 per ton from the previous quarter, primarily due to lower electricity unit costs, and were unchanged from the fourth quarter of 2010.
Full-Year Results— Full-year consolidated net earnings of $778.2 million ($2.45 per diluted share) reflect an increase of more than fivefold over net earnings of $134.1 million ($0.42 per diluted share) for the full year 2010.
Full-year results were impacted by a non-cash gain of $29.0 million ($0.06 per diluted share) recognized in the fourth quarter for the correction of an actuarial calculation related to the medical plan covering certain eligible early retirees. This calculation did not have a material impact on any previously reported results.
Nucor incurred a $142.8 million ($0.28 per diluted share) LIFO charge for the full year 2011, compared with a charge of $164.0 million ($0.32 per diluted share) in 2010.
Pre-operating and start-up costs were $97.1 million for the full year 2011, a decrease from $174.8 million for the full year 2010. The decrease in pre-operating and start-up costs from the prior year is attributed to several projects coming out of start-up, including the SBQ mill in Memphis, the wire rod products mill in Kingman, Ariz., and the galvanizing line in Decatur, Ala.
Consolidated net sales of $20.02 billion reflect a 26% increase compared with $15.84 billion for 2010, while average sales price per ton increased 21% vs. 2010. Total tons shipped to outside customers were 23,044,000 tons, an increase of 5% over 2010 levels.
The average scrap and scrap substitute cost per ton used for the full year 2011 was $439, an increase of 25% over $351 in 2010.
Overall operating rates at the company’s steel mills were 74% for the full year 2011, increasing from 70% in 2010 and 54% in 2009. Total energy costs for the year reflect an increase of approximately $1 per ton from the prior year primarily due to higher electricity unit costs.
Other Highlights — Construction is continuing on the company’s 2,500,000-ton direct reduced iron (DRI) facility in Louisiana. The majority of the equipment will begin arriving in 2012, and the project is on schedule for completion of construction and beginning of start-up in mid-2013.
The company’s liquidity position remains strong with $3.15 billion in cash and cash equivalents, short-term investments, and restricted cash and investments. In December, the company increased the amount of its revolving credit facility to $1.5 billion and extended its maturity date to December 2016. The company has no outstanding borrowings under the revolving credit facility.
Outlook— The company said the declining trend in steel margins appears to have bottomed overall, but particularly for the company’s bar and beam mills where margins per ton improved compared to the third quarter of 2011. Margins at the company’s plate and sheet mills continued to be impacted by higher import levels that began in the second quarter of 2011 as well as new domestic sheet mill supply. The company noted that selling prices have recently trended up for both the plate and sheet steel mills, while scrap prices have been flat to slightly down.
The company said it expects earnings in the first quarter of 2012 to be improved from fourth quarter 2011 levels, after adjusting for one-time benefits received in the fourth quarter. The company said that end markets such as automotive, heavy equipment, energy and general manufacturing have continued to experience improvements in demand, benefitting special bar quality, sheet and plate products, and that it is also seeing small but encouraging signs of improvement in its construction products business.
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; 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.
