Portland, Oregon-based scrap and steel company Schnitzer Steel Industries Inc. announced Wednesday that it expects a net loss for its first fiscal quarter of 2009, ended November 30, 2008, as a result of low sales volumes and reduced sales prices.
Weak market conditions in all three of the company's businesses (which, in addition to its recycling business also include auto parts and steel manufacturing businesses) have resulted in renegotiations, deferrals and cancellations of customer contracts, the company said, resulting in a non-cash write down of about $60 million for its metals recycling and steel manufacturing inventories in its first quarter.
The company said that it reduced total production output in the quarter by about 40 percent from average 2008 levels and also implemented cost cutting measures, which include reducing its workforce.
According to Schnitzer Steel’s president and chief executive Tamara L. Lundgren, the company has generated “positive cash metals spreads” at its metals recycling and steel manufacturing businesses in the first quarter by aggressively reducing purchase prices. However, Schnitzer's auto parts business will post an operating loss for the fiscal first quarter, due to inventory costs not falling as rapidly as sales prices.
The company will announce its full first quarter results on January 8, 2009.
Schnitzer Steel Industries Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 39 operating facilities located in 12 states throughout the country, including six export facilities located on both the East and West Coasts and in Hawaii. The company's vertically integrated operating platform also includes its auto parts and steel manufacturing businesses.