SDI reports drop in Q4 earnings
Fort Wayne, Indiana-based steelmaker Steel Dynamics Inc (SDI) announced that its net income for the fourth quarter of 2005 was $65 million, or $1.31 per diluted share, compared to $82 million, or $1.47 per diluted share, in the fourth quarter of 2004.
The company attributes the drop in fourth quarter profit to weaker demand for its products as well as a 13 percent slide in average selling prices for its products.
Net sales for the fourth quarter were $570 million, five percent lower than the fourth quarter of 2004. Year-to-date net sales were $2.2 billion for the year 2005, a two percent increase over 2004 net sales of $2.1 billion.
"2005 was a very strong year for Steel Dynamics," said Keith Busse, President and CEO. "Although steel demand fell off sharply in the first half of the year, steel shipments rebounded in the second half of the year with backlogs remaining strong as we move forward in 2006. Overall, though, we were able to maintain strong profit margins for the year in spite of selling prices and steel
scrap costs fluctuating dramatically throughout the year."
"Looking ahead to 2006, we are optimistic about the sustainability of favorable domestic steel market conditions, especially for
construction steels and bar products," Busse said. "The U.S. economy remains strong which suggests steel demand should continue to be strong across most steel-consuming market sectors. Steel inventories appear to be in line now, if not low by historical standards, and consequently we expect SDI's steel shipments to continue to grow this year. SDI anticipates first quarter results to be relatively unchanged, if not up slightly, from the fourth quarter. Selling values could rise slightly, but it is too soon to make that call. We expect
scrap prices on a linked-quarter basis will be relatively unchanged."
SDI, which produces flat rolled, bar, and structural steel products at its four Indiana locations, expects its previously announced merger with Roanoke Electric steel to close by the end of the first quarter of 2006.
The company is also rumored to be in acquisition talks with Chaparral Steel, second largest structural
beams producer in the US. If SDI acquires Chaparral Steel there will be only two major companies that supply structural
beams to North American market. The new SDI almost certainly will be a formidable competitor to
Nucor in structural and bar products.