Nucor Corporation NUE has provided its outlook for the fourth quarter of 2015, ending Dec 31, 2015. The company anticipates earnings for the fourth quarter to lie in the range of 15−20 cents per share, down significantly from the year-ago quarter figure of 65 cents as well as 71 cents earned in the third quarter of 2015. Analysts polled by Zacks currently expect earnings of 48 cents per share for the fourth quarter on an average.
The company’s shares slipped roughly 3.8% to close at $38.66 yesterday, reflecting the weak earnings guidance.
Nucor stated that it anticipates overall operating performance at its steel mills segment to decline sequentially in the fourth quarter of 2015. The company witnessed reduced margins in its sheet and bar steel mills owing to falling selling prices which more than offset lower raw materials pricing. Nucor stated that this was a result of continued deterioration in global steel markets, aggravated by overall excess capacity and historically high import levels.
In this regard, Nucor further notified that although the counteractive processes are not proceeding per its expectations, initial anti-dumping and countervailing duties and affirmative critical circumstances findings in the steel sheet cases should benefit domestic sheet mills in the first half of 2016.
Although the company saw improvements in the nonresidential construction markets since 2014, the space is seeing a slowdown owing to seasonal factors. Moreover, while the automotive markets remain strong, weakness in the energy, heavy equipment and agricultural markets prevails.
Nucor anticipates the performance of its downstream products segment to decline sequentially in the fourth quarter owing to seasonality, but improve year over year. The expected year-over-year improvement is the result of gradual improvement in the nonresidential construction markets. The company also expects a weaker performance in the raw materials segment owing to lower scrap and metallic commodity prices at its scrap processing businesses.
Further, Nucor intends to conclude a planned maintenance outage at Nucor Steel Louisiana in the fourth quarter. Following the completion, the Louisiana direct reduced iron (“DRI”) facility will resume operations only after market prices of alternative raw materials increase from current depressed levels.
Nucor currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials sector include Grupo Simec S.A.B. de C.V. SIM, Harmony Gold Mining Company Limited HMY and Richmont Mines Inc. RIC, all carrying a Zacks Rank #2 (Buy).
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