Schnitzer Steel Industries Inc.
) provided its outlook for the fourth quarter 2012 ending August
31, 2012. The company expects both prices and sales volumes at its
metal recycling business to lag on a sequential basis. Ferrous
sales volumes and prices are also expected to decline 10%-15% while
non-ferrous sales volumes and prices are anticipated to slip 5%-10%
from the third quarter of 2012.
Schnitzer Steel's Auto Parts Business is also expected to
witness a 15%-20% fall in revenues compared with the preceding
quarter. However, volumes in the company's Steel Manufacturing
Business are expected to increase by 15% from the previous quarter
but selling prices are expected to decline by 5% from the third
The company also announced some restructuring initiatives,
including retrenching 300 jobs or about 7% of its current work
force owing to falling metal prices. The company expects to break
even on an adjusted basis, excluding restructuring charges of about
12 cents per share, in the current quarter. The company expects to
incur a $5 million restructuring charge in the fourth quarter. It
also expects to incur about $12 million in restructuring charges by
the end of fiscal 2013.
The restructuring will help Schnitzer to improve efficiency and
support future growth, while lowering costs and enhancing profits.
The restructuring program also involves integrating parts of the
metals recycling and auto parts business, streamlining some
corporate functions, and reducing various organizational
In June 2012, the company released its third quarter 2012
results. It delivered earnings per share (EPS) of 40 cents,
surpassing the Zacks Consensus Estimate of 24 cents. Results were
disappointing when compared to the year-ago quarter's EPS of $1.17.
However, on a sequential basis, EPS improved 16%.
Revenues in the quarter fell 10% year over year and 1% sequentially
to $880 million, falling short of the Zacks Consensus Estimate of
Portland, Oregon-based Schnitzer Steel Industries, Inc. is one
of the nation's largest recyclers of scrap metal, a leading
provider of used and recycled auto parts and a manufacturer of
finished steel products. The company represents the complete cycle
of reused metals through its three integrated operating segments.
It competes with the likes of
Commercial Metals Company
Sims Metal Management Limited
COMMERCIAL METL (CMC): Free Stock Analysis
NUCOR CORP (NUE): Free Stock Analysis Report
SCHNITZER STEEL (SCHN): Free Stock Analysis
SIMS GROUP- ADR (SMS): Free Stock Analysis
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Currently, the stock retains a Zacks #3 Rank, which translates into
a short-term (1 to 3 months) Hold rating. We currently have a
long-term (more than 6 months) Neutral recommendation on the shares
of Schnitzer Steel.