Recently announced,
Harsco Corporation
(
HSC
) received a six-year contract from Alfa Acclai Group to provide
steel mill services to the latter. The total value of the contract
exceeds a whopping $55 million.
Alfa Acclai Group is a reinforced concrete steel manufacturer
since 1950. It currently produces around 2.5 million tonnes of
steel per year with a global employee database of 1,200 people.
Through this contract, Alfa shall effectively reuse its scrap
smelting by-products, thereby ameliorating energy consumption and
dissolving pollution emission issues.
Harsco will provide on-site scrap and slag yard management
services to Alfa's steel mill in Brescia, northern Italy. In this
regard, the company shall create a new scrap yard and also render
support services for maintenance and processing. A technologically
advanced slag handling system coupled with an improved weighing
system and an advanced GPS detection facility shall be installed at
the unit which is expected to be operational by 2012 end.
The company recently declared its fourth quarter financial
results of fiscal 2011, whereby it's Metals and Mineral segment
faced a few challenges with which Harsco had to grapple using its
contract win gains. Operating margin was also quite under pressure,
coming in at 4% compared to 6.4% in the previous comparable year
quarter, primarily due to European demand softness.
However, the company remains optimistic with regard to its first
quarter performance of 2012. We believe that such contract awards
along with the various restructuring activities implemented largely
would escalate revenues and margins considerably in the upcoming
quarters.
Formidable players in the industry for Harsco to remain wary
about are
W.W. Grainger, Inc.
(
GWW
),
TMS International Corporation
(
TMS
) and
ScanSource Inc.
(
SCSC
). We continue to maintain a Neutral recommendation on Harsco. Our
view is supported with a Zacks #3 Rank on the stock which
translates into a short-term rating of Hold.
GRAINGER W W (
GWW
): Free Stock Analysis Report
HARSCO CORP (
HSC
): Free Stock Analysis Report
SCANSOURCE INC (
SCSC
): Free Stock Analysis Report
TMS INTL CP-A (
TMS
): Free Stock Analysis Report
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