Los Angeles, California-based Reliance Steel & Aluminum Co. reported Thursday that in Q2 2013, net income was $81 million, down 25.6 percent from $108.8 million in Q2 2012 and down 3.2 percent from $83.7 million in Q1 2013. Total sales were $2.45 billion, a 10.8 percent increase from the $2.21 billion in Q2 2012 and up 20.9 percent from $2.03 billion in Q1 2013. Tons sold increased 24.2 percent from Q2 2012 and rose 28.7 percent from Q1 2013.
David H. Hannah, Chairman and CEO of Reliance, commented: "In general for the 2013 second quarter, both demand and pricing were a bit weaker than we anticipated at the end of the previous quarter. We remain highly focused on managing all aspects of the business that are within our control, which continues to mitigate much of the impact from these challenging market conditions. Inventory turns improved somewhat compared to the prior quarter and gross margins declined slightly but were solid in light of the weak pricing we experienced--each indicative of the strong operational performance of our managers in the field."
Later in the call, when asked about the recent price increase announcements in the flat rolled market, Reliance Steel executives said the vast majority of the increases have held. With production disruptions in the market no longer an issue--AK Steel has restarted its Middletown, Ohio furnace and extra slabs are coming into ThyssenKrupp Alabama from Brazil--the newest round of price increase has a chance to stick, he said, but Reliance will be "very guarded and will run inventories close to the vest." He disclosed that there is a chance for price deterioration sometime in the second half of the year.
Reliance commented on demand levels in the company's various end markets, noting: Aerospace was mixed in Q2 as pricing and overall volumes declined slightly compared to Q2 2012; Reliance expects that demand in the aerospace market will improve as 2013 progresses. Meanwhile, the automotive sector exhibited continued strong and steady demand during the quarter, while energy (oil and gas) continues to perform well, despite lower demand levels as compared to Q2 2013. Demand in the sector is poised to increase modestly in 2013, with continued pressure on pricing due to excess industry capacity. Heavy industry performed reasonably well, while non-residential construction show signs of a slow and steady recovery.