Schnitzer Reports 1st Quarter Fiscal 2012 Results
01/10/2012 - Schnitzer Steel Industries reported $0.25 diluted earnings per share from continuing operations for its fiscal 2012 first quarter ended November 30, 2011.
Schnitzer Steel Industries, Inc. reported $0.25 diluted earnings per share from continuing operations for its fiscal 2012 first quarter ended November 30, 2011. This compares with $0.64 diluted earnings per share from continuing operations in the year-ago first quarter.
The company attributes the lower earnings to global macroeconomic concerns during the quarter, which resulted in a significant slowdown in customer buying patterns and a sharp decline in sales prices. Higher average inventory costs were carried forward into the first quarter, significantly compressing first quarter operating margins as average inventory costs did not decline as quickly as cash purchase prices for scrap.
“Market conditions deteriorated in the midst of our first fiscal quarter as the global steel manufacturing industry scaled back raw material purchases on expectations of a weaker global economy,” said Tamara Lundgren, President and CEO. “Despite the short-term volatility, all indications are that long-term demand fundamentals in our export markets remain strong, primarily due to expectations for further growth and increasing urbanization in developing economies, and increasing usage of recycled metals globally.
"Our continued focus on optimizing throughput in our operations resulted in strong first quarter volumes in our Metals Recycling Business, higher car purchases in our Auto Parts Business and positive operating performance in our Steel Manufacturing Business despite challenging market conditions,” said Lundgren. "As the markets regain momentum, we expect to achieve improved profitability and increasing benefits from our investments in our North American supply chain and in our nonferrous separation technologies which together enhance our flows and yields."
Steel Manufacturing Business — Schnitzer’s Steel Manufacturing Business benefited in the first quarter from increased sales volumes due to slightly higher demand and lower customer inventory levels vs. the year-ago first quarter. The segment reported finished steel sales volumes of 107,000 tons, reflecting a 9% increase from the year-ago quarter.
Average net sales prices for finished steel products increased 14% compared to the year-ago quarter, with higher sales prices and improved utilization resulting in positive operating income.
Steel Manufacturing Outlook — Looking ahead to the second quarter of 2012, the company said that sales volumes are expected to be slightly higher than the first quarter of fiscal 2012, while average net sales prices are expected to approximate those for the first quarter of fiscal 2012. Operating margins are expected to approximate break-even.
Schnitzer Steel Industries is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 56 operating facilities located in 14 states, Puerto Rico and Western Canada. The business has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico, and its integrated operating platform also includes its auto parts and steel manufacturing businesses. With an effective annual production capacity of approximately 800,000 tons, the company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products.
