Irving, Texas-based Commercial Metals Company (CMC) announced Thursday financial results for its third quarter ended May 31, 2013. Net earnings for Q3 were $19 million on net sales of $1.8 billion. This is substantially lower than net earnings of $40.7 million, on net sales of $2 billion for the three months ended May 31, 2012.
The Americas Recycling segment recorded an adjusted operating profit of $3.2 million for Q3, compared with an adjusted operating profit of $3.9 million in the prior year's third quarter. Ferrous selling prices declined 6 percent to $331 per ton when compared to the third quarter of fiscal 2012, and margins also decline.
The Americas Mills segment recorded an adjusted operating profit of $47.5 million for this year's Q3, compared with an adjusted operating profit of $59.3 million in the prior year's Q3. Billet shipments declined during Q3 of fiscal 2013 compared to the same quarter in the prior year. However, rebar shipments during this year's Q3 were up when compared to the same quarter in the prior year. During the quarter, CMC said it experienced lower margins on merchant products due to import pressure, although our rebar margins improved as compared to the prior year's third quarter.
While early indications for US domestic scrap prices are pointing higher, CMC Chairman, President and CEO, Joe Alvarado said it is too early to predict whether rebar and merchant bar prices will rise into July and August. In the construction sector, he said California and South Florida have shown the most strength, but the international market remains difficult. An "unknown factor" is the impact of Chinese exports, he said, adding that lately a fair amount of Korean rebar has been arriving on the US West Coast. Korea may be getting squeezed by China in Southeast Asian markets that Korea would normally serve and is therefore looking elsewhere for its rebar exports.
The Americas Fabrication segment recorded an adjusted operating profit of $13.5 million for Q3, compared with an adjusted operating profit of $0.2 million for the prior year's third quarter. This operating improvement is mostly due to expanding margins on the heels of declining raw material input prices. Shipments declined 7 percent in Q3 compared to the third quarter of fiscal 2012.
Alvarado added, "Our results for the third quarter ended May 31, 2013 are generally consistent with our outlook from last quarter. We experienced improvements over the second quarter of fiscal 2013 in all of our business segments except our Americas Mills segment. Sequentially, shipments were up across the board consistent with seasonal trends. However, on a year over year basis, a modest improvement in rebar shipments was more than offset by weaker shipment levels of merchant and light structural products contributing to lower levels of profitability in our Americas Mills segment."
Net earnings for the nine months ended May 31, 2013 were $73.3 million, on net sales of $5.3 billion, compared with net earnings of $177.3 million on net sales of $6 billion for the nine months ended May 31, 2012.