Steel Dynamics, Inc. announced fourth quarter and annual 2019 financial results. The company reported fourth quarter 2019 net sales of $2.4 billion and net income of $121 million.
Comparatively, prior year fourth quarter net sales were $2.9 billion, with net income of $270 million. Sequential third quarter 2019 net sales were $2.5 billion, with net income of $151 million.
In a press release, the company said lower earnings resulted from two planned annual maintenance outages at the company's Butler and Columbus flat roll divisions, causing higher than normal maintenance and associated costs of approximately $15 million. The outages also reduced flat roll steel shipments by an estimated 70,000 tons to 80,000 tons, further reducing fourth quarter earnings.
SDI’s annual 2019 net income was $671 million, representing the company's third-best annual performance, with net sales of $10.5 billion, as compared to record 2018 net income of $1.3 billion with net sales of $11.8 billon. The company said the decline in revenues was primarily caused by declining steel prices related to customer inventory destocking that occurred throughout the year, which more than offset the benefit of the company's 2019 record annual steel and fabrication shipments. The decline in earnings was driven by lower average flat roll steel selling values, as average 2019 annual prime hot roll coil price indices decreased approximately $229 per ton, or 28 percent when compared to 2018, resulting in significant metal margin compression, the company said.
During 2019, the company increased value-added shipments from its steel processing locations, representing 15 percent of the total steel shipments, compared to 10 percent in 2018. These locations use steel products as their primary raw material, and the associated steel procurement costs represented over 16 percent of the company's steel operations cost of goods sold in 2019, compared to 12 percent in 2018.
“Based on domestic steel demand fundamentals, we are constructive regarding North American steel market dynamics,” said Mark D. Millett, President and Chief Executive Officer, in the press release. “We believe North American steel consumption will experience modest growth and will be supported by further steel import reductions and the end of steel inventory destocking. We believe recent and possible trade actions could have a positive impact in further reducing unfairly traded steel imports into the United States, including coated flat roll steel, which could have a significant positive impact for Steel Dynamics, as we are the largest non-automotive flat roll steel coater in the United States.”