Steel Dynamics expects significantly lower earnings in Q4

Thursday, 17 December 2015 01:59:33 (GMT+3)   |  
       

Steel Dynamics, Inc. provided fourth quarter 2015 earnings guidance in the range of $0.03 to $0.07 per diluted share, compared to sequential third quarter 2015 earnings of $0.25 per diluted share and prior year fourth quarter adjusted earnings of $0.40 per diluted share, which excluded non-cash fixed asset impairment charges related to the company's Minnesota Operations and certain post-acquisition costs related to the company's Columbus steel mill acquisition. 
  
Despite lower earnings, the company expects to still generate cash flow from operations in excess of $200 million during the fourth quarter 2015, which would result in record high liquidity at the end of 2015.   
  
Profitability from the company's steel operations for the fourth quarter 2015 is expected to be significantly lower in comparison to the sequential third quarter 2015 results, based on lower steel shipments caused by continued high level of steel imports, customer destocking and seasonally lower demand. 

While lower shipments are expected across the steel platform, the most significant decline is anticipated in the company's commodity-grade hot roll products. Fourth quarter 2015 overall average steel product pricing is expected to decrease meaningfully, offsetting the savings derived from lower ferrous scrap costs.  The heavy equipment, agricultural and energy markets remain challenged, while the automotive market remains strong and the construction market continues to improve.       
  
Sustained strong demand for the company's fabricated steel joist and decking products in what is typically a seasonally lower demand timeframe indicates the non-residential construction market is continuing a positive trend.  Fourth quarter 2015 fabrication shipments are expected to increase from sequential third quarter levels. 

However, average pricing is expected to be lower based on both market conditions and a shift in product mix related to the September 2015 acquisition of additional decking assets.  Steel raw material costs are not expected to decline to the same degree as product pricing; therefore, despite improved volume, fourth quarter 2015 profitability from the company's fabrication operations is expected to be lower than the record results achieved in the sequential third quarter. 
  
Metals recycling financial results are expected to decline to a loss position for the fourth quarter 2015, based on lower shipments and metal spread compression.  Lower domestic steel mill utilization is expected to result in significantly weaker ferrous scrap shipments and has decreased ferrous scrap selling values approximately $65 to $70 per ton from the end of September 2015 to the end of November 2015.  

Tags: North America 

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