) expects higher profit on an year over year basis in
second-quarter 2014 (ending Jul 5, 2014). But it sees earnings to
come at the bottom end of its expectations that supported its
qualitative guidance issued in April.
The NC-based steel maker envisions earnings for the second
quarter in the band of 35 cents to 40 cents per share, higher than
27 cents logged a year ago. The projected results are comparable
with 35 cents recorded in first-quarter 2014. Nucor, in its
first-quarter 2014 earnings call, said that it expects improved
earnings on a sequential basis in the second quarter.
Nucor's shares slipped roughly 2.2% last Friday to close at
For its Raw Materials division, Nucor expects an operating loss
of $30 million or 6 cents per share at its new direct reduced iron
(DRI) plant in Louisiana due to high product yield losses. A
planned three-week outage has been initiated at the plant this
month to make some process adjustments to cut yield losses. The
company sees meaningful improvement in the performance of the DRI
facility in the third quarter and expects profitability in late
The DRI facility, Nucor's largest project, came online in Dec
2013. The $750 million plant is expected to produce 2.5 million
tons of DRI annually when the operations are in full swing.
Nucor expects results at its Steel Mills segment to improve
modestly on a sequential basis in the second quarter as improved
profitability in sheet and plate more than offset reduced
profitability in the structural steel business. A planned outage
related to the sheet piling capital project is expected to lead to
lower shipments for structural steel in the quarter. Moreover,
higher imports continue to impact pricing and margins.
Following a weaker seasonal performance in the first quarter,
Nucor's fabricated construction products businesses returned to
profitability in the second quarter, helped by improving conditions
in the non-residential construction market. The company sees higher
operating profits from these businesses moving ahead.
Nucor is seeing strength across end markets such as automotive,
energy, heavy equipment and general manufacturing. Demand across
these end-markets is healthy, lending support to the company's top
However, Nucor remains exposed to weak pricing and challenging
steel market fundamentals. The company, like other steel makers, is
hobbled by surging domestic steel imports.
Nucor currently retains a Zacks Rank #3 (Hold).
Some other stocks worth considering in the steel space
Universal Stainless & Alloy Products Inc.
Grupo Simec S.A.B. de C.V.
). While Universal Stainless holds a Zacks Rank #1 (Strong Buy),
Grupo Simec and ThyssenKrupp carry a Zacks Rank #2 (Buy).
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