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Steel Dynamics Provides Fourth Quarter Earnings Guidance
12/19/2011 - Steel Dynamics expects to report fourth quarter earnings in the range of $0.08 to $0.12 per diluted share, a drop from earnings of $0.19 per diluted share in the previous quarter.
Steel Dynamics, Inc. reports that the company expects fourth quarter earnings to be in the range of $0.08 to $0.12 per diluted share
While anticipated earnings represent an improvement over year-ago fourth quarter earnings of $0.04 per diluted share, they are lower than third quarter 2011 earnings of $0.19 per diluted share. The company said the decrease is primarily due to an estimated 25% drop in anticipated fourth quarter flat rolled earnings and an estimated $10 million reduction in earnings from the company's liquid iron production facility, Iron Dynamics (IDI).
The company attributes the reduction in Iron Dynamics earnings to a planned three-week shutdown for relining the facility's submerged arc furnace, which led to an anticipated 20% decrease in quarterly shipments and increased expenses of just over $3 million related to the project. Iron Dynamics achieved a time span of two years since the previous relining, a record.
The company noted that flat rolled demand was weaker during October and the first part of November, while pricing was a challenge early in the quarter, reducing anticipated volumes. In addition, the cost of raw materials consumed declined more slowly, which resulted in reduced fourth quarter anticipated margins. While order entry and pricing began to increase late in the fourth quarter, these positive factors did not materially impact fourth quarter performance, but are expected to be beneficial to the first quarter of 2012.
The company anticipates that continued uncertainty within the U.S. and global economies will continue to impact corporate and consumer spending, resulting in a challenging demand environment. The company noted that demand is beginning to occur in the energy, construction equipment, agricultural, and automotive sectors, and believes if more stability develops into next year, demand could be expected to increase, along with steel pricing and margins.
The company also announced that its board of directors has declared a quarterly cash dividend of $0.10 per common share payable on or about January 13, 2012, to shareholders of record at the close of business on December 31, 2011.
