WASHINGTON (dpa-AFX) - Steel Dynamics Inc. (STLD) on Wednesday reported a profit for the first quarter that declined 57 percent from last year amid unexpected margin compression, as flat roll markets moderated more quickly than raw material input pricing. Earnings per share missed analysts' expectations.
Steel makers have been hurt by lower customer orders as customers have been reducing purchases in anticipation of lower prices.
Mark Millett, President and Chief Executive Officer of Steel Dynamics said in a statement, 'Given the mid-quarter disruption in the flat roll markets, we believe this was a solid performance achieved by all of our employees. The good news remains that demand in certain market sectors continues to be steady and flat roll order entry has regained momentum from mid-quarter levels.'
The Fort Wayne, Indiana-based company's operating income declined 42 percent from the year-ago period, as margins decreased within the company's flat roll steel and metals recycling operations.
Steel shipments during the quarter declined slightly from the year-ago period to 1.45 million tons. However, the product mix differed significantly as flat roll shipments decreased 107,200 tons.
Long products shipments, most notably for the company's Structural and Rail Division, increased 104,000 tons. In addition, metals recycling and fabrication volumes improved.
The average selling price per ton shipped for the company's steel operations in the quarter was $875, a decrease of $15 per ton compared to the prior-year quarter. Meanwhile, the average quarterly ferrous scrap cost per ton melted increased $18 for the same comparative period.
The company's steel operations reported net sales of $1.23 billion for the quarter, representing 60 percent of the company's external sales. However, net sales edged down from $1.25 billion in the prior-year quarter.
Steel Dynamics' net income for the first quarter was $45.67 million or $0.20 per share from $105.90 million or $0.46 per share in the year-ago period. Net income for the preceding fourth quarter was $30 million or $0.14 per share.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share. Analysts' estimates typically exclude special items.
Earnings for the quarter were reduced by about $0.03 per share, representing financing costs of $14 million associated with the January refinancing activities, offset by associated interest cost savings of $3 million.
Net sales for the quarter declined 1.9 percent to $1.98 billion from $2.02 billion in the prior-year quarter. Analysts had a consensus estimate of $2.06 billion.
Looking ahead to fiscal year 2012, Steel Dynamics said that despite continued uncertainty within the U.S. and global economies, it believes there is the possibility for more stability to develop in the year as improvements continue in certain market sectors, such as energy, agriculture, automotive, transportation and construction equipment.
STLD closed Wednesday's trading at $13.88 on a volume of 2.30 million shares. In after-hours, the stock declined $0.11 or 0.79 percent to $13.77.
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