US minimill steelmaker Nucor Corporation reported on Thursday its third consecutive quarterly loss. However, the firm's loss in Q3 was not as steep as that of Q2.
Nucor announced a consolidated net loss of $29.5 million for the third quarter of 2009, compared to a net loss of $133.3 million in the second quarter of 2009, an improvement of 78 percent. The results compare to net income of $734.6 million in the third quarter of 2008.
In the first nine months of 2009, Nucor reported a consolidated net loss of $352.5 million, compared with net earnings of $1.73 billion in the first nine months of 2008.
Nucor commented on its Q3 performance in a statement, which read: "While overall steel mill utilization increased from 46 percent in the second quarter to 69 percent in the third quarter, the increase was primarily due to the end of customer destocking. Our view remains that there has been little improvement in real demand and the uncertainty in our economy is still very high. We also continue to believe that real demand is in for a long, slow recovery.
Commenting on the outlook for the remainder of the year, Nucor stated: "The fourth quarter presents its own seasonal issues that are separate of the general economic slowdown due to the holidays and year-end plant shutdowns by some of our customers. While our fourth quarter results will benefit from a significant improvement in raw material costs, our results could be negatively impacted by the potential of lower operating volumes/rates in both sheet and bar products. Customers are currently taking advantage of shortened mill lead times adding to the difficulty of forecasting volumes for the fourth quarter. We will again provide quantitative guidance after the midpoint between our quarterly earnings releases.
Other relevent figures in Nucor's Q3 2009 earnings report are as follows:
In the third quarter of 2009, Nucor's consolidated net sales increased 26 percent to $3.12 billion compared with $2.48 billion in the second quarter of 2009 and decreased 58 percent compared with $7.45 billion in the third quarter of 2008. Average sales price per ton increased one percent from the second quarter of 2009 and decreased 45 percent from the third quarter of 2008. Total tons shipped to outside customers were 5,114,000 net tons in the third quarter of 2009, an increase of 24 percent over the second quarter of 2009 and a decrease of 24 percent from the third quarter of 2008.
In the first nine months of 2009, Nucor's consolidated net sales decreased 58 percent to $8.25 billion, compared with $19.51 billion in last year's first nine months. Average sales price per ton decreased 32 percent while total tons shipped to outside customers decreased 38 percent compared to the first nine months of 2008.
The average scrap and scrap substitute cost per ton used in the third quarter of 2009 was $299/nt, a decrease of four percent compared with $312/nt in the second quarter of 2009 and a decrease of 44 percent from $533/nt in the third quarter of 2008. The average scrap and scrap substitute cost per ton used in the first nine months of 2009 decreased 29 percent compared to the first nine months of 2008.
As expected and as discussed in its guidance, third quarter results include a burden from the accelerated consumption of high-cost pig iron inventories at Nucor's sheet mills. These inventories were purchased prior to the collapse in the economy and raw materials pricing in last year's fourth quarter. For the third quarter, the negative impact of the high-cost pig iron inventories was approximately $180 million. Through the first nine months of the year, the impact was approximately $420 million. However, the consumption of the high-cost pig iron inventories was completed by the close of the third quarter.
Pre-operating and start-up costs of new facilities increased from $29.7 million in the third quarter of 2008 to $47.1 million in the third quarter of 2009 and increased from $74.8 million in the first nine months of 2008 to $111.9 million in the first nine months of 2009. In 2009, these costs primarily related to the SBQ mill in Memphis, Tennessee, the Castrip® project in Blytheville, Arkansas, the proposed iron-making facility, and the galvanizing line in Decatur, Alabama.