Fiscal full-year and Q4 revenues both boost significantly on ferrous volume growth, enlarged geographic footprint and yield-increasing technology investments.
The old adage "you reap what you sow" was evident in Portland, Oregon-based Schnitzer Steel Industries' full-year fiscal 2011 and Q4 results, released Thursday. Full-year income reached $3.5 billion, an approximately 52 percent increase from fiscal 2010, while revenues for the quarter ended August 31, 2011 totaled $1.08 billion, a 69 percent increase when compared to fiscal Q4 2010, and a 10 percent increase from Q3 2011. Total operating income for the full year totaled $186 million--a 48 percent increase year-on-year--while Q4 income totaled $56 million.
In a conference call, President and CEO Tamara Lundgren attributed the strong growth to strategies Schnitzer has implemented throughout the year as well as continuous worldwide demand for scrap. Some of the aforementioned strategies include 10 acquisitions that enlarged the company's footprint on both US coasts, plus technology investments that increased yield and maximized operational efficiency.
As for global demand, Lundgren stressed that even though it may seem as if emerging regions are slowing down on growth, any lull is balanced by increased focus on EAF operations and blast furnace facilities' efforts to become more energy efficient. As for the US, she conceded that overall, domestic scrap inventories were kept low in fiscal 2011, as concern for both the US and world economy resulted in prudent stocking. Nevertheless, Schnitzer's outlook for 2012 calls for increased scrap demand both in the US and abroad.
Already in fiscal 2011, ferrous volumes totaled 5.3 million tons, up 26 percent from fiscal 2010, while Q4 volumes reached 1.5 million tons, up 5 percent from Q3 2011 and up 35 percent from Q4 2010. Ferrous revenues also increased yearly and quarterly: fiscal 2011 revenues totaled $2.4 billion, a 26 percent increase from the previous year; and Q4 revenues reached $740 million, up 5 percent from the previous quarter and up 72 percent from the same quarter of the previous year.
Likewise, the company's Steel Manufacturing Business performed admirably in both full-year and quarterly results, delivering $317 million in revenues for the full year--up 11 percent from 2010--and $93 million for Q4, up 2 percent from the previous quarter and up 25 percent from Q4 2010. Additionally, operating income reached $3 million in fiscal 2011, an immense improvement from the $6 million loss reported for fiscal 2010. On a quarterly basis, the division reported $2 million in profits during Q4, despite continued softness in the long steel products market, especially on the West Coast.
Profit for steel manufacturing was driven primarily by higher sales prices and higher sales volumes, said Lundgren, adding that the company will "continue to maximize value from our product diversification and operational efficiencies."
Looking forward to Q1 2012, Schnitzer expects sales volumes in ferrous scrap to approximate Q1 2011, while sales prices are expected to be significantly higher. As for steel manufacturing, sales volumes are predicted to increase slightly from Q1 2011 levels, while average sales prices are expected to increase year-on-year, approximating levels from Q4 2011. However, Lundgren pointed out that the first quarter of the fiscal year is traditionally weak, and it is therefore best to analyze trends through long-term data, instead of focusing on quarterly performance.