Portland, Oregon-based Schnitzer Steel Industries, Inc. reported Wednesday a 29 percent year-on-year increase in revenues for fiscal year 2010, and a 21 percent year-on-year increase in revenues for the fourth quarter ended August 31, 2010. In a conference call, President and CEO Tamara Lundgren announced that Schnitzer has "substantially recovered from the recent financial crisis," and that the company is "reaping the rewards from plans put in place over the last five years."
For the full fiscal year 2010, Schnitzer reported revenues of $2.3 billion, compared to $1.8 billion in fiscal year 2009. Additionally, revenues for the fourth quarter of fiscal 2010 were $639 million, compared to $527 million in the same quarter of 2009. However, Q4 revenue was down from Q3 ($704 million), which the company attributed to lower steel scrap prices during the period.
Despite price fluctuations, Schnitzer's scrap division saw an increased demand from China. According to Lundgren, China was the company's largest purchaser of scrap in Q4, and even though the Chinese government sought to rein in steelmaking capacity in recent months, the mills that were shut down were small, rural facilities-not the larger coastal mills that drive demand for US scrap.
In the fourth quarter, Schnitzer's scrap business shipped ferrous volumes of 1.1 million tons. According to the company's outlook for fiscal 2011, ferrous sales volumes are expected to increase slightly from the volumes in Q4, reflecting continuing steady export demand. As for pricing, Schnitzer expects market prices for steel scrap to approximate fourth quarter prices, while remaining significantly higher than prices in Q1 of fiscal 2010.
Lundgren was especially proud of the auto parts division, which boasted record revenues for the full fiscal year and the fourth consecutive quarter of year-over-year improvement in operating income for Q4. "Car purchase volumes, a key driver of the Auto Parts Business, remained strong, increasing 13 percent over the prior year quarter," said Lundgren. "While lower commodity prices impacted margins in the last quarter, enhanced supply channels, improved production operating efficiencies and new stores all contributed to our healthy full-year performance."
Schnitzer's steel manufacturing business delivered break-even financial results during Q4, despite continued softness in the West Coast long steel products market. While the outlook for fiscal 2011 calls for sustained weak demand for finished products, average sales prices are expected to remain stable from Q4. When asked during the question-and-answer portion of the conference call Schnitzer's opinion on Gerdau Ameristeel acquiring California-based rebar mini-mill TAMCO, Lundgren replied that the main challenge in today's market is not domestic competition, but rather the generally sluggish economic conditions.
Nevertheless, Lundgren remained positive. "We delivered strong financial and operating performance in fiscal 2010 continuing an overall upward trend," she said. "Our dedicated focus on improving our operating efficiencies, enhancing our supply networks and investing in growth capital projects significantly improved our financial and operating performance despite a sluggish domestic economy."