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Nucor Updates Third Quarter Guidance
09/16/2009 - Nucor updates its guidance for the third quarter, saying that it now expects results in the range of a loss of $0.15 to $0.20 per diluted share.
Nucor Corp. has updated its guidance for the third quarter ending October 3, 2009, saying that it now expects results in the range of a loss of $0.15 to $0.20 per diluted share.
The updated guidance compares to a loss of $0.43 per share that the company reported in the previous quarter (2Q09), and earnings of $2.31 per share in the year-ago third quarter (3Q08). It also compares to qualitative guidance for a smaller loss than the second quarter, which the company had issued in late July.
The updated guidance compares to a loss of $0.43 per share that the company reported in the previous quarter (2Q09), and earnings of $2.31 per share in the year-ago third quarter (3Q08). It also compares to qualitative guidance for a smaller loss than the second quarter, which the company had issued in late July.
The company noted that third quarter results carry a heavy burden due to accelerated consumption of high-cost pig iron inventories at its sheet mills. These higher-cost inventories were purchased prior to the collapse in the economy and raw materials pricing in last year's fourth quarter. The company estimates this negative impact to be approximately $180 million (about $0.37 per share after-tax) for the third quarter. Through the first nine months, the impact has been approximately $420 million (more than $0.85 per share after-tax).
The company also noted tat it will complete consumption of the high-cost pig iron inventories by the close of the third quarter.
The company also noted tat it will complete consumption of the high-cost pig iron inventories by the close of the third quarter.
"The Nucor team has done an excellent job reducing overall costs in this unprecedentedly severe economic and steel market environment,” commented Dan DiMicco, Nucor's President, Chairman and CEO. “We have a number of operations that are currently profitable in these most challenging conditions — including our two large acquisitions made in recent years, Harris Steel acquired in 2007 and The David J. Joseph Co. acquired in 2008.
"While order entry and operating rates at most of our steel mills improved in the third quarter to rates of approximately 70% on average, the increases were mostly due to the end of customer destocking,” added DiMicco. “Our view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. We also continue to believe that real demand is in for a long, slow recovery.
“The fourth quarter presents its own seasonal issues separate of the general economy due to the holidays and year-end plant shutdowns by our customers; however, our fourth quarter results should benefit from significant improvement in raw material costs.
“The fourth quarter presents its own seasonal issues separate of the general economy due to the holidays and year-end plant shutdowns by our customers; however, our fourth quarter results should benefit from significant improvement in raw material costs.
"As in past downturns, Nucor is well positioned to grow stronger and gain market share in this period of economic turmoil,” concluded DiMicco. “Our team is already working to capitalize on Nucor's position of strength — one arising from our balance sheet, low cost and highly flexible production capabilities, unrivaled product diversification, and, most importantly, Nucor's extremely productive and innovative work force."
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 Co., 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.
