Nucor Cuts Second Quarter Guidance As Global Pricing Pressures Continue
by June 22, 2015 10:29 pm 159 views
Nucor Corp., which operates three steel mills in Northeast Arkansas, lowered its second quarter expectations as the Charlotte, N.C.-based steel giant continues to cope with global oversupplies driven by cheap imports from China, company officials announced last week.
Nucor now expects second quarter results to be in the range of 20 to 25 cents per diluted share, down 46% from earnings of 26 cents per share a year ago. Wall Street had expected the steelmaker to report second quarter earnings of 31 cents for the period ending July 4, according to Thomson Reuters.
According to a company news release, Nucor officials said overall operating performance at the steel mills segment in the second quarter of 2015 is expected to decrease from the first three months of the year.
“Pricing remains under pressure from exceptionally high levels of imports that continue to flood the domestic market in the second quarter of 2015. Imports accounted for an estimated 32% of the finished steel market in the first five months of 2015, compared with an estimated 26% in the first five months of 2014,” said the Nucor 2Q guidance.
Nucor officials also noted that the slump in oil prices has also negatively affected its operations, given the industry’s huge exposure to the energy sector.
“Energy markets remain challenging as domestic rig counts continue to decline and the destocking of the energy supply chain is not yet complete,” Nucor said.
According to the American Iron and Steel Institute (AISI), U.S. steel mills shipped 7,087,864 net tons of product in April, down 13.9% from the 8,235,096 net tons shipped in April 2014. Shipments year-to-date in 2015 are 29,046,995 net tons, a 9.5% decrease vs. 2014 shipments of 32,086,347 net tons for first four months of the year.
Despite the industry slump, Nucor has continued its corporate policy of not laying off employees during economic downturns because of lack of work. The Charlotte steelmaker has maintained that practice now for more than 30 years.
On a European trade mission trip last week, Gov. Asa Hutchinson and state economic development officials prominently promoted the state’s steel industry at the international METEC Trade Fair in Düsseldorf, Germany.
Meanwhile, according to AISI, there are more than 5400 jobs direct jobs created by the state’s steel industry, along with another 37,000 that are indirectly supported by the trade group’s nine member companies with operations in Arkansas.