Steelmaker
Nucor Corporation
(
NUE
) reported adjusted (excluding special items) earnings of 42 cents
per share in the first quarter of 2012, above the Zacks Consensus
Estimate of 40 cents and its own expectation of 30 to 35 cents.
However, profit (as reported) dipped roughly 9% year over year
to $145.1 million (or 46 cents a share) from $159.8 million or 50
cents per share reported a year ago.
Nucor's consolidated net sales increased 5% year over year to
$5.07 billion in the quarter. The jump in the top line was driven
by a 6% increase in average sales price per ton. However, the
increase in revenues was not enough to meet the Zacks Consensus
Estimate of $5.085 billion as a 1% decline in total tons shipped to
outside customers weighed on the top line.
The average scrap and scrap substitute cost per ton used in the
quarter was $445, up 5% year over year.
Overall operating rates at Nucor's steel mills were
approximately 79% in the quarter, which is comparatively flat as
against the operating rate of 80% in the year ago period. Total
energy costs dropped approximately $2 per ton from the prior-year
quarter, primarily due to lower unit costs for natural gas.
Nucor's liquidity position remained strong at the end of the
quarter. The company had cash and cash equivalents and short-term
investments of $2.38 billion as of March 31, 2012. It also has an
untapped $1.5 billion revolving credit facility that will mature in
December 2016.
In February, Nucor's board of directors had declared a cash
dividend of 36.5 cents per share, which was the company's 156
th
quarterly cash dividend on the trot. The dividend is payable on May
11, 2012, to stockholders of record as of March 30, 2012.
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. In addition, the David J.
Joseph Company, which Nucor had acquired in 2008, acquired three
metal recycling companies through its wholly owned subsidiaries.
This move is expected to bolster the company's regional recycling
platforms since the acquisitions will bring an estimated additional
annual capacity of 275,000 tons.
Nucor expects that its earnings will improve slightly in the
second quarter this year. The company is witnessing improved demand
in end markets such as heavy equipment, automotive, general
manufacturing and energy. However, a sluggish construction market
is still a cause for concern.
Nucor Corp. faces stiff competition from
Commercial Metals Co.
(
CMC
) and
United States Steel Corp.
(
X
). We currently have a long-term Neutral recommendation on the
company. The stock holds a short-term Zacks #3 Rank (Hold).
COMMERCIAL METL (
CMC
): Free Stock Analysis Report
NUCOR CORP (
NUE
): Free Stock Analysis Report
UTD STATES STL (
X
): Free Stock Analysis Report
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