Schnitzer Steel Industries, Inc. reported results for its first quarter of fiscal 2020 ended November 30, 2019. The company reported a net loss of $7 million, compared to net income of $12 million in fiscal Q4 2019, and income of $16 million in fiscal Q1 2019.
Revenues for the quarter totaled $406 million, compared to $548 million in the previous quarter and $564 million in the same quarter of 2019.
In a press release, the company said volumes and margins in both operating divisions (auto and metals recycling, and Cascade Steel and Scrap) were impacted by the sharp decline in ferrous selling prices during the first two months of the quarter. Ferrous selling prices reached multi-year lows in October, and supply flows tightened considerably, the company said, adding that the rise in ferrous selling prices in November led to an easing in supply flows but contributed to margin compression against sales contracted earlier in the quarter.
The auto and metals recycling division reported an operating loss in the first quarter of $2 million, or $3 per ferrous ton, and an adjusted operating loss of $1 million, or $1 per ferrous ton. The company said the sharp decline in average selling prices outpaced the reduction in purchase costs for raw materials and adversely impacted operating results by compressing metal spreads and generating an approximately $4 million, or $5 per ferrous ton, adverse impact from average inventory accounting.
Cascade Steel and Scrap achieved operating income in the first quarter of $4 million, in an environment of declining prices for finished steel and ferrous and nonferrous scrap, the company said. Operating results were reportedly adversely impacted by margin compression due to the decrease in average net selling prices for finished steel products, particularly wire rod, outpacing the decrease in the purchase cost of steel-making raw materials. The company said lower sales volumes amid customer destocking and a reduced contribution from recycling operations in the declining scrap price environment, also adversely impacted CSS’s operating results, partially offset by benefits from productivity initiatives.