Schnitzer Steel Industries, Inc.
) has announced its guidance for the third quarter of fiscal 2013
(ending May 31, 2013). For the quarter, the company expects to
incur a pre-tax restructuring charge of roughly $1 million in
connection with its restructuring program announced last year.
Schnitzer expects its full-year tax rate to be around 33%. The
company stated that it expects its third quarter effective tax
rate to be significantly higher than the estimated full year
Further, Schnitzer announced that in the first three quarters of
fiscal 2013, consolidated selling, general and administrative
expenses excluding the impact of the recent acquisitions, are
expected to be roughly 9% lower year over year.
As per Schnitzer, selling prices of ferrous export decreased
steadily throughout the third quarter with market prices at the
end of May decreasing about $50 per ton compared with the
previous quarter. The lower prices were the results of weaker
export demand. Declining selling prices, restricted supply
trends, and lower tax benefits are expected to sequentially lower
consolidated net income.
In the Metals Recycling Business, average net ferrous sales
prices for shipments during the third quarter are expected to
decline sequentially by about $5 per ton. Ferrous sales volumes
are forecast to increase 5% to 10%. Nonferrous average sales
prices are expected to be flat versus the second quarter of
fiscal 2013 while sales volumes are expected to increase roughly
10% due to higher production. Operating income per ferrous ton is
expected to be in the range of $6 to $8.
In Schnitzer's Auto Parts Business (APB), seasonally stronger car
purchases, admissions and part sales along with strong volumes
from acquisitions are expected to result in a sequential revenue
increase of roughly 10%. APB's reported operating margin is
expected to be around 9% for the third quarter which includes a
3% impact of start up costs of the ten new locations that were
added during the second quarter.
Average selling prices for Schnitzer's Steel Manufacturing
Business, are expected to decrease modestly from the second
quarter while sales volumes are likely to jump 30% due to
gradually improving end markets in the third quarter.
Schnitzer currently holds a Zacks Rank #3 (Hold).
Other companies in the steel industry having favorable Zacks
Angang Steel Company Limited
LB Foster Co.
ArcelorMittal South Africa Limited
). All of them retain a Zacks Rank #2 (Buy).
ARCELORMITTL SA (AMSIY): Get Free Report
ANGANG STEEL LT (ANGGY): Get Free Report
FOSTER LB CO (FSTR): Free Stock Analysis
SCHNITZER STEEL (SCHN): Free Stock Analysis
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