Toronto, Ontario-based metal distribution company Russel Metals Inc. announced Tuesday Q3 2010 earnings of $17 million, stronger than the comparable net earnings for Q3 2009. For the nine months ended September 30, 2010 net earnings were $52 million on revenues of $1.6 billion.
Consolidated revenues for Q3 2010 were $582 million, up 15 percent from the previous quarter. Volumes increased sequentially from Q2 and Q3 2009. Margins of 18.2 percent, however, were down from the Q2 margins of 20.8 percent.
Metals service centers tons shipped increased 16 percent from the comparable quarter in 2009 and 1 percent from Q2 2010 resulting in revenues for the quarter of $316 million. Gross margin dollars due to higher cost inventory declined and resulted in a segment operating profit of $13 million for Q3 2010 compared to $13 million in Q3 2009, and $20 million in Q2 2010. During the quarter, the company announced plans for the closure of its Port Robinson facility and to combine its Ontario structural steel and other long products operations at its Cambridge facility. Costs relating to the closure of Port Robinson, including severance and fixed asset write-downs of $3 million were charged to earnings in the quarter.
Brian R. Hedges, President and CEO, commented that the company has reacted "to reduced volumes and have produced earnings at current business levels to support our dividend. We believe that the short and medium term economic outlook is for modest growth in the markets that we serve. Our decision to resize, move and combine our structural steel operations in Ontario with our long product operations was a proactive step to reflect the reduced activity of the Ontario manufacturing base."
Revenues for our steel distributors operations increased to $76 million, the highest level for any quarter in the past year. Operating profits for Q3 2010 were $5 million, down from $7 million in Q2 2010 as gross margins decreased from 18.6 percent in Q2 to 12.6 percent in Q3.
Mr. Hedges commented further on growth opportunities, "we are starting to see some earnings accretive acquisition opportunities. We have engaged in some discussions but, to date, the acquisition prices have exceeded our comfort levels. We will continue to be patient and evaluate each opportunity as it is presented."