Irving, Texas-based steel products manufacturer Commercial Metals Company (CMC) reported net earnings Friday of $8 million on net sales of $1.8 billion for the quarter ended August 31, 2010. This compares with net earnings of $7.2 million or on net sales of $1.4 billion for the same period last year.
Net loss for the year ended August 31, 2010 was $205.3 million on net sales of $6.3 billion. For the same period last year, net earnings were $20.8 on net sales of $6.4 billion.
CMC Chairman, President and CEO Murray R. McClean said, "an expected seasonal uptick did lift operations in our fourth quarter, but it was absent of indicators of a sustainable economic recovery in the United States. Major European economies, led by Germany, had more encouraging results. China was at an extreme, attempting to slow down booming growth. Ferrous scrap and finished goods pricing fell through the period, but netted overall higher metal margins; pricing movement was driven by international demand. Our geographic diversification and lower cost structure allowed four of our five segments to be profitable - Americas Fabrication continues to face difficult markets."
Commenting on CMC's mills in the US, McClean said that "on the strength of higher sales prices, metal margins increased for the fourth consecutive quarter. For the first time this fiscal year, metal margins were higher than the comparable quarter last year. Excluding our new micro mill in Arizona, volumes shipped were slightly ahead of last year's quarter. Public works continues to be the major end-use market. Our mills ran at 63 percent of capacity during the quarter."
"Our steel mills had an adjusted operating profit of $39.5 million compared to an adjusted operating profit of $28 million in the same quarter last year...the price of ferrous scrap consumed at the mills during the quarter increased $31 per net ton(nt) compared to last year; however, the average selling prices increased by $73 per nt" added McClean.
According to McClean, "downstream operations continued to face challenging market conditions-- strong competition, weakening selling prices, lackluster demand, and higher steel costs eroded margins. The environment was particularly acute in the west where state budgetary concerns were heightened. Fourth quarter rebar shipments were the highest of the fiscal year, but were margin constrained. Public works remained as the most consistent end-use market. On a better note, our post plants were profitable as were our specialty heat treating operations. The segment reported an adjusted operating loss of $17.1 million compared to last year's fourth quarter adjusted operating profit of $14.3 million."
McClean concluded, "There is no clear catalyst for market improvement. Overall market conditions prevailing in our fiscal 2010 fourth quarter continue into the first quarter of fiscal 2011, but we anticipate that some seasonal weakness will set in by the end of the quarter. Ferrous scrap prices should trend marginally higher; nonferrous pricing remains strong. Rebar pricing should remain relatively stable; metal margins may trend slightly lower."