Net income rises fivefold for CMC in fiscal Q3

Wednesday, 22 June 2011 02:11:27 (GMT+3)   |  
       

Irving, Texas-based Commercial Metals Company (CMC) reported Tuesday that net income jumped more than fivefold to $36.2 million in fiscal Q3 (ended May 31, 2011), compared to a net loss of $8.8 million in fiscal Q3 2010. However, for the nine months ended May 31, 2011, CMC recorded a $9.3 million net loss as operating losses in the Americas fabrication segment narrowed. In Q3 2010, CMC recorded a net loss of $213.3 million for the same period.

CMC said that while margins recovered modestly in the metals fabrication segment and backlogs continued to grow in both tonnage and prices, "the overall market remains weak for fabricated steel with credit availability, state and federal funding capacity, and unemployment trends affecting the launch of new projects." Americas fabrication had an operating loss of $14.7 million in fiscal Q3 2011.

In its steelmaking segments, CMC said that finished goods pricing outpaced ferrous scrap prices, resulting in higher metal margins over the quarter. Metal margins were $320/nt in fiscal Q3, compared to $289/nt in the previous quarter and $280/nt in fiscal Q3 2010 as ferrous scrap prices consumed at mills were up $57/nt year-on-year, but average steel selling prices rose $97/nt. And on average, CMC steel mills operated at about a 73 percent rate of utilization.

CMC Chairman and CEO Murray R. McClean said that overall buyers' inventories are relatively low, and so any uptick in real demand levels will be immediately felt--especially in the long products sectors such as rebar and merchant bar, where any increase in demand is instantly noticeable. But real demand, McClean said, is only "reasonable, not great." Based on recent increases however, CMC did said that it expects rebar and merchant bar prices to rise beginning July 1.


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