Steel Dynamics Inc. (STLD), the nation’s fifth-largest producer of carbon steel products, has recently announced that it expects to earn between 10 cents and 20 cents per share in the fourth quarter of 2009, compared with the Zacks Consensus Estimate which is pegged at 23 cents. A year earlier, the company had reported a loss of 45 cents per share. Steel Dynamics had lost $83 million in the fourth quarter of 2008 as customers ordered less steel and the company had to lower steel prices.
However, Steel Dynamics’ net income of 30 cents per diluted share in the third quarter of 2009, ahead of the Zacks Consensus Estimate of 23 cents, was driven by cost reduction through higher production and shipping volumes in the Flat-Rolled segment and a better-than-expected performance in the Metals Recycling segment. The Metals Recycling and Ferrous Resources segment produces pig iron for the Flat-Rolled division.
Net sales of $555 million represented 33% of the company’s total sales for the third quarter of 2009. Total ferrous scrap shipments in the segment during the third quarter were down 54% year over year to 1.3 million tons. However, shipments were up 26% sequentially. While non-ferrous scrap shipments increased 28% to 217 million pounds sequentially, these were 11% lower than the year-ago quarter.
Fort Wayne, Indiana-based Steel Dynamics had announced in October 2009 that a decline in certain steel prices, shipments and profit margins at its metals recycling operations would likely cause the company to earn less than the 30 cents per share it had reported in the third quarter of 2009. In its press release, Steel Dynamics stated that orders for the company’s flat-rolled and bar steel have increased recently and the pricing has improved. However, Steel Dynamics is uncertain about sustaining this momentum.
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