Steel Dynamics reports lower net income for Q3

Thursday, 17 October 2019 01:02:11 (GMT+3)   |   San Diego
       

Steel Dynamics, Inc. announced third quarter 2019 financial results, with net sales of $2.5 billion and net income of $151 million. Comparatively, prior year third quarter net sales were $3.2 billion, with net income of $398 million. Sequential second quarter 2019 net sales were $2.8 billion, with net income of $194 million.

Third quarter 2019 operating income for the company's steel operations was $240 million, or 19 percent lower than sequential second quarter 2019 results. In a press release, the company said the sequential earnings decline was driven by lower realized product pricing and decreased shipments in the company's sheet steel operations, which more than offset the benefit of lower scrap costs in the quarter. The third quarter 2019 average external product selling price for the company's overall steel operations decreased $70 sequentially to $809 per ton. The average ferrous scrap cost per ton melted at the company's steel mills decreased $41 to $275 per ton.

The company's steel processing locations represented 17 percent of the shipment mix in the third quarter 2019, compared to 16 percent in the sequential quarter and 12 percent in the prior year third quarter. These locations use steel products as their primary raw material, and the associated steel procurement costs represented 17 percent of the steel operations cost of goods sold in the third quarter 2019, 18 percent in the sequential quarter, and 9 percent in the prior year third quarter.

Third quarter 2019 operating income from the company's steel fabrication operations was a strong $35 million, or 15 percent higher than sequential second quarter results. Earnings improved as higher shipments and lower raw material steel input costs resulted in expanded profit margins. The steel fabrication platform's order backlog remains strong, and customers remain optimistic concerning non-residential construction projects.

As for an outlook, President and CEO Mark Millett said, "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 current 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."


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