Nucor posts record profits, moves forward with new Midwest steel mill

by Wesley Brown ([email protected]) 913 views 

U.S. steelmaker Nucor Corp., which operates three large steel mills in Northeast Arkansas, on Tuesday (Jan. 29) reported record fourth quarter and year-end profits as the company continues to benefit from trade tariffs implemented by President Donald Trump’s administration in early 2018.

The Charlotte, N.C.-based steel producer also reaffirmed its earlier decision at the beginning of the year to move forward with plans to build a state-of-the-art plate mill factory “in the U.S. Midwest” with an investment of $1.35 billion.

For the quarterly period ended Dec. 31, Nucor reported fourth quarter net earnings of $646.8 million, or $2.07 per share, up 68% from year ago earnings of $383.9 million, or $1.20 per share. Nucor’s net sales increased 24% compared with $5.09 billion in the fourth quarter of 2017. Wall Street forecasted the U.S. steel giant to report fourth quarter earnings of $1.94 per share on revenue of $6.31 billion, according to Thomson Reuters.

On a yearly basis, Nucor reported profits of $2.36 billion, or $7.42 per diluted share, up 78% compared to the steelmaker’s earnings of $1.32 billion, or $4.10 per share, in the same period of 2017. Both the quarterly and yearly financial results, respectively, represent the most profitable performances in the company’s history.

“The best way to sum up 2018 is this – it was a record year for Nucor. We posted record earnings per share and record revenue, and we shipped a record amount of steel,” said Nucor Chairman and CEO John Ferriola.

“Over the past decade, we have been positioning Nucor to take full advantage of an upturn in the steel market. During that time, we invested more than $9 billion to increase the company’s peak earnings power,” Ferriola continued. “These investments enhanced our competitive strengths by building on our product diversity and market leadership positions. Our 2018 financial results demonstrate that Nucor’s disciplined strategy of investing for profitable growth is working.”

On Jan. 7, Ferriola said the company’s investment to build another U.S. steel mill in an unknown Midwest location is consistent with the company’s drive to continue delivering sustainable, profitable growth and superior returns for Nucor shareholders.

The location of that factory, which is expected to be unveiled this year, is planned to be fully operational in 2022 and capable of producing 1.2 million tons per year of steel plate products. Company officials said the project will create approximately 400 full-time jobs. By building the plant in the Midwest, Nucor said it will position the steel giant to serve manufacturing customers in the largest plate-consuming area in the U.S.

According to company officials, the yet unknown steel factory will produce cut-to-length, coiled, heat-treated, and discrete plate ranging from 60 to 160 inches wide, and in gauges from 3/16 of an inch to 14 inches in thickness, enabling Nucor to supply plate products that the company does not currently offer. Nucor currently operates plate mills in North Carolina, Alabama and Texas.

In May 2018, Nucor Arkansas said it will invest $240 million in a new galvanizing line at its Hickman-based sheet mill. The new line will employ about 100 workers and will produce 500,000 tons each year. Nucor jobs at the planned Arkansas mill will pay around $80,000 per year, company officials have said. That expansion is expected to be completed in the first half of 2021. That announcement came right after the company opened a $230 million specialty cold mill in April 2018 at the same site, adding 100 jobs.

Following 2018’s record-setting earnings performance, Nucor said it expects the company’s 2019 earnings performance to also be one of the best in Nucor’s history.

“As we enter 2019, we have a positive outlook on end-use demand and general economic conditions,” the company said. “The profitability of our steel products segment in the first quarter of 2019 is expected to be similar to the fourth quarter of 2018. We expect first quarter of 2019 earnings to be much stronger than the first quarter of 2018.”

Nucor’s shares were up 3.4%, or $2.27 at $60.77 per share. Over the past 52 weeks, the company’s shares have traded in the range of $49.70 as a low and $70.03 as a high.