Toronto, Ontario-based Russel Metals Inc. reported financial results from the fourth quarter of 2019 and full-year 2019. For the 2019 fourth quarter the company recorded a loss of CAD 7 million on revenues of CAD 0.8 billion. These results compare to net income of CAD 46 million on revenues of CAD 1.1 billion in the 2018 fourth quarter.
For the year ended December 31, 2019, the company generated net income of CAD 77 million on revenues of CAD 3.7 billion, compared to net income of CAD 219 million on revenues of CAD 4.2 billion for the year ended December 31, 2018.
Revenues in the company’s metals service centers decreased 21 percent to CAD 412 million for the quarter compared to the same period in 2018 due to lower tons shipped and selling price per ton. Tons shipped decreased 7 percent and average selling price decreased 15 percent from the average selling price compared to the fourth quarter of 2018. Gross margins were 18.8 percent compared to 20.9 percent for the fourth quarter of 2018. Operating profits of CAD 9 million were 69 percent lower than the CAD 28 million reported in the same quarter in 2018.
Revenues in the energy products segment decreased 21 percent to CAD 343 million compared to CAD 432 million in the 2018 fourth quarter due to a non-recurring line pipe project in 2018 and demand reductions. Gross margin as a percentage of revenues decreased to 11.4 percent compared to 17.8 percent in the same quarter last year caused in part by inventory provisions of CAD 14 million.
Revenues in the steel distributors segment decreased by 49 percent to CAD81 million compared to CAD157 million in the 2018 fourth quarter due to lower steel prices and reduced demand in the company’s US operation. Gross margins as a percentage of revenues were 3.6 percent compared to 13.3 percent due to a CAD 4 million inventory provision in the company’s US steel distributor operation. The steel distributors segment reported an operating loss of CAD3 million compared to an operating profit of CAD 11 million in the 2018 fourth quarter.
Mr. John G. Reid, President and CEO, commented, "During 2019, our operations turned in a solid performance, in what proved to a be a challenging year where trade actions that had dramatically increased steel prices in 2018 were reversed in mid-2019 leading to selling prices that were lower than in 2017. Certain of our operations had stellar years, particularly Wirth Steel, Comco Pipe and Color Steels who reported stronger results than 2018. During the year, we emphasized working capital management and generated CAD 250 million in cash from operating activities. Looking forward to 2020, there has been a modest increase in pricing and consistent demand."
USD = CAD 1.32 (February 12)