Shares of metal processor
) got a lift after it announced a joint venture with two Japanese
steel makers to process steel near Shanghai, China. It will join
Nisshin Steel Co., Ltd. and Marubeni-Itochu Steel Inc. to make
cold rolled strip steel mainly for the automotive industry. The
Ohio-based company's shares gained as much as 4.7% following the
announcement. The stock is up around 38% so far this year.
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Worthington will have a 10% stake in the joint venture, which
will be known as Zhejiang Nisshin Worthington Precision Specialty
Steel Co., Ltd., with Nisshin and Marubeni-Itochu owning 55% and
35%, respectively. The deal also provides Worthington an option
to increase its ownership in the joint venture. The companies
will sign the formal agreement by the end of this month.
The deal will enable Worthington to leverage its expertise in
cold rolled strip steel in China, the biggest automotive
production market on the planet. The joint venture plans to
construct a plant in Pinghu City, Zhejiang, with an annual
capacity of roughly 130,000 tons. Construction of the facility is
expected to commence immediately following government clearance.
The plant is expected begin production in fourth-quarter 2015.
Worthington saw its profit surge roughly 61% year over year to
$54.6 million or 76 cents per share in first-quarter fiscal 2014
(ended Aug 31, 2013), reported last month, on strength across its
Steel Processing and Pressure Cylinders divisions and
contributions of its joint ventures.
The results were also boosted by gain associated with favorable
tax adjustments related to the company's purchase of an
additional 10% interest in the Tailor Welded Blanks (TWB) joint
venture. Adjusted earnings of 58 cents a share met the Zacks
Revenues rose around 4% year over year to $692.3 million and beat
the Zacks Consensus Estimate of $689 million. Sales were boosted
by higher volumes stemming from recent acquisitions, which more
than offset lower pricing.
Worthington remains positive about fiscal 2014 and continues to
expect growth both organically and from acquisitions. The company
is seeing strength in the automotive space and improvements in
commercial construction and agriculture markets. Worthington will
remain committed to explore fresh opportunities and drive
improvement and optimization across its businesses.
Worthington currently retains a Zacks Rank #2 (Buy).
Other companies in the metal processing and fabrication industry
having favorable Zacks Rank are
Northwest Pipe Co.
). All of them hold a Zacks Rank #1 (Strong Buy).