Nucor releases lower Q1 earnings guidance

Nucor Corporation, North America’s largest recycler, has released guidance  regarding its earnings results for the first quarter of 2009 ending on April 4. The corporation expects a loss of $0.55 to $0.65 per diluted share at the end of the first quarter.
 
Nucor had not previously issued numerical guidance for the first quarter. Nucor explained in a press release issued Tuesday that back in January, when the firm issued marginally higher qualitative expectations for first quarter results, the company did not forecast the continued drop in prices that have occurred since that time, nor the pronged weak demand that has made destocking a very hard task. “Our revised guidance for a first quarter loss reflects continued deterioration in economic and market conditions,” the news release read. “Customer demand has continued to weaken, with resulting downward pressure on orders, production rates and steel pricing in all of our product lines.”
 
The firm expects its overall mill utilization rate to drop to approximately 43 percent in the first quarter of 2009 compared to the fourth quarter of 2008, when their mills ran at 48 percent capacity. The company also warned of the continued impact of its high-priced pig iron inventory, much of which was purchased prior to the collapse, and is now being processed into sheet at a slower than expected pace due to the weak demand. The firm stated that if production levels remain low, pig iron costs will also impact their second and third quarter earnings this year. However, it expects that the impact of higher cost scrap will disappear in the second quarter.
 
"The unprecedented speed and magnitude of the global economy's decline to depressed levels not seen in our lifetime have presented severe challenges in 2009, commented Nucor's chairman, CEO and president Dan DiMicco, “The economy has fallen off a cliff -- and there is no visibility as to the timing of the recovery.”

On a more positive note, Mr. DiMicco assured investors that with Nucor's “unrivaled position of strength in the steel industry” it is working to continue the company's long tradition of making the most of economic downturns to emerge even stronger and rewarding its shareholders with attractive long-term returns.