Nucor Corporation
(
NUE
) provided its outlook for the third quarter ending September 29,
2012. The company expects earnings to be in the range of 30 cents
to 35 cents per share in the quarter, down from 57 cents per share
earned in the year-ago quarter.
Nucor expects lower earnings in the third quarter due to the
negative impact of approximately $26 million or 5 cents per share
in inventory purchase accounting adjustments related to the
acquisition of Skyline Steel LLC and a loss of $17.6 million or 4
cents on the sale of Nucor Wire Products Pennsylvania Inc assets.
The company expects that the third quarter results will also
include estimated LIFO credit of $80.0 million or 16 cents.
Nucor expects lower profitability at its steel mills due to
continued increase in steel imports and sluggish economy.
Meanwhile, volatility in scrap prices, along with a combination of
political and economic uncertainty, has also disrupted supply
stocking levels.
Nucor released its second quarter 2012 financial results in July
2012. The company reported adjusted (excluding special items)
earnings of 43 cents per share in the quarter, missing the Zacks
Consensus Estimate of 47 cents.
A sticky situation in Europe forced Nucor to incur an impairment
charge of $30 million associated with its Duferdofin Nucor S.r.l.
joint venture as utilization rates continued to remain depressed
and lagged the budgeted levels through the first half of the year.
The adjusted earnings excluded cost associated with the Skyline
Steel buyout and a one-time gain.
Profit, as reported, dropped substantially by 63% to $112.3 million
or 35 cents a share from $299.8 million 94 cents reported a year
ago. Oversupply in the industry and a gloomy European market hurt
Nucor's bottom line in the quarter.
Even though shipments to outside customers increased 6% year over
year to 5,925,000 tons, a 6% fall in average sales price
constrained Nucor's revenues. As a result, consolidated net sales
dipped to $5.10 billion in the quarter from $5.11 billion in the
same period last year, but managed to brush past the Zacks
Consensus Estimate of $5.07 billion.
The company, which competes with
Commercial Metals Co.
(
CMC
) and
United States Steel Corp.
(
X
), maintains a Zacks #3 Rank, which translates into a short-term (1
to 3 months) Hold rating. We currently have a long-term Neutral
recommendation on the shares of Nucor.
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