Mixed 4Q for Nucor Corp. - Analyst Blog
29 Gennaio 2013 - 2:47PM
Zacks
Steel giant Nucor Corporation’s (NUE) adjusted
(excluding special items) earnings was 31 cents per share in the
fourth quarter of 2012, ahead of the Zacks Consensus Estimate of 29
cents. The adjusted earnings exclude costs associated with Skyline
Steel buyout and a gain value inventories using the last-in,
first-out (LIFO) method of accounting.
Profit (as reported) came in at $136.9 million (or 43 cents a
share), almost flat compared with $137.1 million or 43 cents per
share reported a year ago. The company’s earnings were within its
guidance range due to better-than-expected operating profits,
primarily at sheet, plate and beam mills, and a larger than
expected LIFO credit.
For full-year 2012, adjusted earnings came in at $1.37 per
share, missing the Zacks Consensus Estimate of $1.64. Profit (as
reported) came in at $504.6 million (or $1.58 per share), down
35.2% from $778.2 million or $2.45 per share reported a year
ago.
A 4% fall in average sales price weighed on Nucor’s revenues in
the fourth quarter. Revenues slid 7.8% year over year to $4,451
million, missing the Zacks Consensus Estimate of $4,463 million.
Total tons shipped to outside customers fell 4% year over year to
5,478,000 tons in the reported quarter and total mill shipments
decreased 3.5% to 4,762,000 tons.
For the full year, average sales price declined 3%. As a result
of this, revenues decreased 3% year over year to $19.4 billion,
missing the Zacks Consensus Estimate of $19.5 billion.
The average scrap and scrap substitute cost per ton used in the
fourth quarter was $372, down 16% from $441 a year ago. Overall
operating rates at Nucor’s steel mills were 71% flat compared with
the year-ago quarter.
The company had ample liquidity on its books as of Dec 31, 2012
with $1.43 billion in cash and cash equivalents, short-term
investments and restricted cash and investments. It also has an
untapped $1.5 billion revolving credit facility that will mature in
Dec 2016.
Nucor's Board declared a cash dividend of 36.75 cents per share
in Dec 2012, which was the company’s 159th quarterly cash dividend
on the trot. The dividend is payable on Feb 11, 2013, to
stockholders of record as of Dec 31, 2012.
Nucor expects first-quarter 2013 earnings to be below the fourth
quarter level due to lower level of operating performance and a
reversal of LIFO from a large credit in the fourth quarter of 2012
to a small charge in the first quarter of 2013. Challenging
economic conditions, higher raw material costs and high import
levels can affect the company’s expectations. The company also
remains cautious about the construction markets.
The steel industry is going through a difficult phase. There is
not enough demand for steel products due to weakness in
construction end markets, resulting in excess supply. Also the
gloomy conditions in the euro zone are another area of concern for
Nucor since it is the largest market for total U.S. exports.
Steel imports have given rise to stiff competition in the
domestic market and the financial crisis in Europe might give rise
to the same conditions in the region. All these factors are proving
to be very difficult to manage for Nucor and hurting its
profitability.
However, Nucor has a diversified client base, and as such, its
business is not highly dependent on the conditions prevalent in a
particular geography. In addition, the company’s cost structure is
highly variable, giving it the luxury of adjusting its costs when
the conditions call for. This enables Nucor to continue its
operations without closing down its facilities, even if the market
conditions in the steel industry are depressed.
Nucor currently retains a short-term Zacks Rank # 3 (Hold).
Other companies in the steel industry with favorable Zacks Ranks
are Gibraltar Industries Inc. (ROCK),
POSCO (PKX) and ArcelorMittal South
Africa (AMSIY). While both Gibraltar and POSCO hold a
Zacks Rank #1 (Strong Buy), ArcelorMittal South Africa holds a
Zacks Rank #2 (Buy).
(AMSIY): ETF Research Reports
NUCOR CORP (NUE): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis Report
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