Irving, Texas-based scrap recycler, steel manufacturer and fabricator, Commercial Metals Company (CMC), announced Wednesday a net profit of $62 million in its first fiscal quarter of 2009, ended November 30, 2008. This figure is down 10 percent from the same period of last year.
CMC’s president and CEO, Murray R. McClean, said in a press release, "The global liquidity crisis has frozen metal markets causing a downward spiral of confidence. The quarter witnessed the complete collapse of ferrous scrap pricing with a benchmark shredded scrap price falling $421 a ton during the period, including uncharacteristic mid-month reductions during October/November.”
The company’s ferrous scrap shipments declined 29 percent from the first fiscal quarter of 2008, to 498,000 tons in the first fiscal quarter of 2009, due to consumers pulling out of the scrap market amidst the economic crisis. As a result, CMC's Americas recycling operations posted an adjusted operating loss of $28.0 million.
Meanwhile, CMC’s utilization rate was at approximately 69 percent during the first fiscal quarter of 2009; however, the company said that rate would have been a lot lower if not for the strong month of September which offset the lower rate usage for the rest of the quarter. The strong results in September also resulted in an its Americas steel mill segment posting an adjusted operating profit of $101.3 million, which was up 54 percent from the prior year. Additionally, the sales revenues from CMC's Americas mills in the first fiscal quarter of '09 were on par with those of the previous year. Its Americas fabrication and distribution segments were also in the black for Q1, while its international mills, fabrication, distribution and scrap recycling segments all posted operating losses.
As for what the company expects going forward, McClean commented, "We remain sober about near-term prospects. Global liquidity remains a real concern, confidence among suppliers, customers, and investors is low, and there is uncertainty about the efficiency and effectiveness of stimulus programs announced worldwide. We will be against the tide for at least the next six months. Long-term the historic pattern of use for steel and related products in emerging economies as well as global infrastructure will drive strong demand.”
Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.