Nucor Corporation (NUE) reported net earnings of $137.1 million, or 43 cents per diluted share (excluding special items) in the fourth quarter of 2011, beating the Zacks Consensus Estimate of 29 cents per share. This was a significant increase from 11.4 million, or 4 cents per diluted share (excluding special items) reported in the year-ago quarter.
Net earnings for fiscal 2011 were $778.2 million, or $2.45 per diluted share, up more than fivefold over net earnings of $134.1 million, or $0.42 per diluted share in fiscal 2010.
Nucor’s consolidated net sales increased 25% year over year to $4.83 billion in the fourth quarter of 2011 attributable to the 18% increase in the average sales price per ton. Total tons shipped to outside customers were 5,683,000 tons in the fourth quarter of 2011, up 7% year over year.
Fiscal 2011 consolidated net sales increased 26% year over year to $20.02 billion attributable to increase of 21% in the average sales price per ton. Total tons shipped to outside customers were 23,044,000 tons, up 5% year over year.
The average scrap and scrap substitute cost per ton used in the fourth quarter of 2011 was $441, up 23% year over year. For fiscal 2011, the average scrap and scrap substitute cost per ton used was $439, up 25% year over year.
Pre-operating and start-up costs of new facilities were $20.8 million in the fourth quarter of 2011 compared with $39.0 million in the prior-year quarter. The decrease in costs was driven by several projects coming out of start-up, at the Special Bar Quality (SBQ) mill in Memphis, Tennessee and the wire rod products mill in Kingman, Arizona and the galvanizing line in Decatur, Alabama.
Overall operating rates at steel mills increased 71% from the previous year quarter. Total energy cost decreased approximately $5 per ton from the prior quarter, primarily due to lower electricity unit costs, and were unchanged from the fourth quarter of 2010.
Nucor’s liquidity position remained strong at the end of the quarter. The company had cash and cash equivalents, short-term investments and restricted cash and investments of $3.15 billion as of December 31, 2011. It has an untapped $1.5 billion revolving credit facility that will mature in December 2016.
In December, Nucor’s board of directors increased the quarterly cash dividend to $0.365 per share. The dividend is payable on February 10, 2012 to stockholders of record on December 30, 2011.
The company is on schedule for completion of construction and beginning of start-up of its 2,500,000-ton direct reduced iron (DRI) facility in Louisiana in mid-2013.
Nucor expects earnings in the first quarter of 2012 to be improved from fourth quarter 2011 levels. End markets such as automotive, heavy equipment, energy and general manufacturing have continued to experience improvements in demand, benefitting special bar quality, sheet and plate products. Nucor also expects to see small but encouraging signs of improvement in its construction products business.
Nucor Corp. faces stiff competition from Commercial Metals Co. (CMC) and United States Steel Corp. (X). We currently provide a long-term Neutral recommendation on the stock. The company has a Zacks #3 Rank (Hold).
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