Staff Report
Published March 17, 2009
Nucor Corp. announced that it expects to lose between 55 cents to 65 cents per share in its first quarter, which ends April 4. The company earned 34 cents per share in the fourth quarter of 2008 and $1.41 per share in the first quarter of 2008.
The company expected marginally better earnings in the first quarter than it gained in the fourth quarter of 2008. Nucor said that, in addition to expecting an increase in orders compared with November and December, it had hoped a reduction in customer inventory would help balance the supply of steel with customer demand. Nucor also did not forecast further price erosion.
Customer demand has continued to weaken, with resulting downward pressure on orders, production rates and steel pricing in all Nucor product lines, the company said.
Nucor’s overall steel mill utilization rate is expected to decline to approximately 43% in the first quarter from the fourth quarter 2008 level of 48%. The lower production has further slowed the rate at which the company’s sheet mills are consuming higher-cost iron units, particularly pig iron inventories, which were purchased before the collapse in both the economy and scrap and pig iron pricing in last year’s fourth quarter.
The company said that any improvement in orders and operating rates will speed up the reduction in Nucor’s raw material inventory.
“The unprecedented speed and magnitude of the global economy’s decline to depressed levels not seen in our lifetime have presented severe challenges in 2009. The economy has fallen off a cliff — and there is no visibility as to the timing of the recovery,” said Dan DiMicco, Nucor’s chairman, CEO and president.
Noting the disappointing first-quarter numbers, DiMicco said the company is responding to the challenges with the “can-do attitude and determination” that characterizes the Nucor culture.
“With Nucor’s unrivaled position of strength in the steel industry, our team is working to continue Nucor’s long tradition of taking advantage of economic downturns to grow even stronger and reward our shareholders with attractive long-term returns,” DiMicco said.
