Nucor earns $145 million in Q1 despite overcapacity and pricing pressures

Friday, 20 April 2012 02:04:02 (GMT+2)

Charlotte, North Carolina-based Nucor Corporation reported Thursday that net income in Q1 fell from the same period a year ago, but increased compared to Q4 2011. Q1 earnings of $145.1 million compared to Q4 2011 earnings of $137.1 million and income of $159.8 million in Q1 2011.

Nucor's average capacity utilization rate in Q1 was about 79 percent, down from 80 percent in Q1 2011, but still a sizeable increase from 71 percent in Q4 2011. Nucor said demand levels in Q1 remained relatively strong, particularly in the automotive, energy, agriculture and heavy equipment sectors, and although non-residential construction activity remains depressed, it appears the market has, at a minimum, stabilized. The size of construction jobs has been larger over the last few months as well. The natural gas market remains lucrative in the US, according to company executives, and is "a game-changer of historic proportions," which, if used wisely, "will drive a renaissance in American manufacturing."

As for Nucor's scrap operations, the David J. Joseph Company (DJJ) acquired three metals recycling companies in Q1, which add an additional 275,000 tons (5 percent) of scrap processing capacity. There was an atypical softness in scrap prices in Q1, and after prices rose in the December 2011 to January 2012 period, scrap prices trended sideways to down the following three months. There has also been much discussion regarding too much shredding capacity in the US, increasing competition, while squeezing margins.