Commercial Metals Company announced financial results for its second quarter ended February 28, 2017. Net earnings for the second quarter of fiscal 2017 were $30.3 million on net sales of $1.1 billion. This compares to net earnings of $10.5 million on net sales of $1.0 billion for the second quarter of fiscal 2016.
CMC’s Americas Recycling segment recorded adjusted operating profit of $7.8 million for the second quarter of fiscal 2017 compared to an adjusted operating loss of $7.6 million for the second quarter of fiscal 2016. The improvement in adjusted operating profit compared to the same period in fiscal 2016 was primarily the result of strong ferrous scrap demand due to increased industry capacity utilization, sharply rising prices in both ferrous and nonferrous materials, as well as ongoing cost reduction measures.
The Americas Mills segment recorded adjusted operating profit of $51.3 million for the second quarter of fiscal 2017 compared to adjusted operating profit of $50.7 million for the corresponding period in fiscal 2016. Profitability in this segment remained relatively flat in comparison to the second quarter of fiscal 2016 due to lower metal margins offset by increased shipments. Some of the increase in shipments was the result of customers buying ahead of announced price increases, however, low service center inventory levels and strength in construction activity in CMC's markets also contributed to the demand. CMC said it believes margins will continue to be pressured by imports and result in selling price increases lagging ferrous scrap cost increases in the near term.
The Americas Fabrication segment recorded adjusted operating profit of $0.5 million for the second quarter of fiscal 2017 compared to adjusted operating profit of $14.8 million for the second quarter of fiscal 2016. The decline in adjusted operating profit for the second quarter of fiscal 2017 continued the effect, seen over the past few quarters, of aggressive competition resulting in lower prices for projects booked running through the fabrication backlog.
As for an outlook, Joe Alvarado, Chairman of the Board and CEO, commented: "We anticipate demand will remain robust, supported by strong levels of bidding in our fabrication business, growth oriented leading indicators such as the Architectural Billings Index and overall consumer confidence across all of our product lines. We anticipate that our shipment levels will continue to grow in our third quarter as we enter the traditionally strong construction season. However, we anticipate further pressure on our margins as imports continue to make it difficult to increase selling prices for our products in line with scrap cost increases."