Schnitzer predicts earnings drop for fiscal Q1

Wednesday, 28 November 2012 01:51:13 (GMT+3)   |   San Diego
       

Steelmaking and metals recycling company Schnitzer Steel Industries, Inc. anticipates that for fiscal Q1 (September-November 2012) prices are likely to drop. For the first quarter, net income is expected to be in the range of break-even before pre-tax restructuring charges of $2 million.

During the first half of the quarter, both export and domestic sales prices for ferrous metals dropped approximately $50 per ton from August levels driven by significantly lower domestic utilization rates and the weak economic conditions globally which continued to adversely impact overall steel demand.

Domestic selling prices recovered toward the end of the quarter. Export sales prices lagged the domestic market slightly, strengthening in November for December shipments. Current export sales prices have nearly recovered to August levels. During the quarter, the supply of scrap continued to be constrained by low US GDP growth, and supply volumes were negatively impacted by the lower price environment.

Ferrous average net selling prices are expected to decline approximately 5 percent from Q4 of fiscal 2012. Ferrous sales volumes are expected to decline approximately 20 percent due to softer demand resulting from the economic uncertainty, reduced flows of raw materials and timing of shipments.

In the Auto Parts Business, the drop in commodity prices is expected to result in a decline of 5 percent in revenues from Q4 of fiscal 2012. Average selling prices and volumes in the steel manufacturing business are expected to be in line with Q4. Steady market conditions, combined with reduced costs of raw materials, are expected to result in operating income of approximately $3 million.


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