Los Angeles, California-based service center Reliance Steel & Aluminum announced Thursday net income of $108.8 million in Q2 2012, down 6 percent from Q1, but a 10 percent increase over Q2 2011 net income of $98.7 million. Net income for the six months ended June 30, 2012 was $225 million, an 18 percent increase year-on-year.
Sales during Q2 of $2.21 billion reflected an 8 percent increase over Q2 2011, but fell 3 percent from Q1 2012 sales. Tons sold for Q2 2012 were up 10 percent from the 2011 Q2 and down 2 percent from the previous quarter.
Even though Reliance's sequential results registered a downtick in Q2, company executives were largely upbeat about market conditions commenting that "we feel pretty good about the industries we support....we don't believe business is as bad as it is being depicted" and some markets such as oil and gas are progressing well despite a mild recent slowdown. As for decreases in carbon prices, all products were affected with plate and flat rolled the most and beams the least. But across all product lines, they believe that prices are at or near the bottom. Nonetheless, buying activity is cautious and both buyers and sellers are waiting until "numbers look a little bit better" and there's less market uncertainty.
Reliance cited imports as a major driver of lower prices in recent months and although import offer prices recently have declined, they still aren't attractive enough for many US buyers to take advantage and import arrivals are likely to slow in Q3/Q4.
While Reliance steel has made a number of acquisitions so far this year and is always looking at new opportunities, company executives dispelled any rumors that the company would consider purchasing the ThyssenKrupp Alabama assets, and "we'd like to do another major acquisition, but not that one... [it's] a little bit too far away with what we're comfortable with," and Reliance would have to "be dependent on a whole bunch of our competitors to make that successful."