Record Mill Shipments, Strong Sales Contributed to Profitable Year at SDI
01/23/2020 - Despite falling steel prices that marked much of 2019, Steel Dynamics Inc. (SDI) recorded one of its best years ever, posting record shipments and near-record net sales, the company reported Thursday.
In its year-end results, the Indiana steelmaker said full-year net income reached US$677.9 million on net sales US$10.5 billion, its second-best sales year ever. Shipments, meanwhile, rose 1.9% to 10.8 million tons, setting a new company record.
For the quarter ending 31 December 2019, net income stood at US$127.3 million on net sales of US$2.4 billion. During the final quarter of 2018, the company reported net income of US$270 million on net sales of US$2.9 billion.
It said Q4 2019 results were mitigated by two planned maintenance outages at its Butler, Ind., and Columbus, Miss., flat roll mills. The outages drove up costs by an additional US$15 million and reduced flat roll shipments by approximately 70,000 tons to 80,000 tons.
Nevertheless, 2019 was an exceptional year, said SDI chief executive Mark Millett.
"We performed at the top of our industry throughout the year,” he said, adding that SDI mills faced an uphill battle as high customer inventories amassed in 2018 dogged the business during 2019.
"Domestic steel demand remained steady in 2019, but as customers began to destock inventories, steel prices declined throughout the year, but firmed in the fourth quarter as destocking subsided and inventory levels were right-sized,” he said.
Millett said his company is optimistic about the year ahead.
"Looking ahead, steel customer inventory levels have moderated, and underlying domestic steel demand remains intact for the primary steel consuming-sectors, including automotive and construction. Customers have been positive concerning the business outlook for 2020. Additionally, our fabrication platform has an order backlog that is even stronger entering 2020 than it was at this time last year, and fabrication customer sentiment remains optimistic, a positive growth indication for non-residential construction projects,” he said.
"Based on domestic steel demand fundamentals, we are constructive regarding North American steel market dynamics," said Millett. "We believe North American steel consumption will experience modest growth and will be supported by further steel import reductions and the end of steel inventory destocking.”
