Nucor NUE saw its revenues and profits tumble in first-quarter 2015, hit by lower pricing. The steel giant raked in profit of $67.8 million or 21 cents a share in the quarter, a roughly 39% drop from $111 million or 35 cents per share logged a year ago. Earnings per share, however, topped the Zacks Consensus Estimate of 14 cents.
Revenues fell 14% year over year to $4,399.4 million on lower pricing and shipments. It missed the Zacks Consensus Estimate of $4,607 million.
Operating Stats
Total tons shipped to outside customers slipped 9% year over year to 5,635,000 tons in the quarter. Total mill shipments also fell 10%. Average sales price declined 5% year over year.
Overall operating rates at the company’s steel mills fell to 65% in the reported quarter from 75% a year ago and 76% in the previous quarter.
Segment Highlights
Nucor saw weaker performance in its Steel Mills segment in the reported quarter on a sequential comparison basis due to reduced pricing and margins resulting from high level of steel imports. Imports remained very high in the quarter accounting for 33% of the finished steel market, putting considerable pressure on the segment’s performance. Selling prices are expected to remain under pressure in the second quarter due to surging steel imports.
Nucor saw continued strength in automotive markets along with improving demand trends in commercial construction markets. However, conditions remain challenging in the energy markets, hit by the oil price slump and high levels of imported oil country tubular goods products into the domestic market.
Operating results in the company’s Downstream Products segment declined sequentially in the quarter on account of seasonality. However, performance improved on an year over year basis on the back of reduced raw material costs and higher volumes.
The Raw Materials segment’s performance in the quarter was weaker on a sequential comparison basis, hurt by bigger loss at Nucor’s steel plant in Louisiana and lower performance of the company’s scrap processing business.
Financial Position
Nucor exited the quarter with cash and cash equivalents of $1,165.9 million, up around 1% year over year. Long-term debt was $4,360.6 million, down around 0.4% year over year. The company also has an untapped $1.5 billion revolving credit facility.
Cash flow from operations was $563.7 million for the quarter, a roughly four-fold year over year rise.
Guidance
Nucor expects earnings to increase in the second quarter of 2015 compared with the first. While margins in the Steel Mills segment are expected to improve, they are forecast to remain under pressure on soft pricing and high levels of imports. Weak pricing is expected to neutralize the benefit of reduced input costs in the second quarter.
While Nucor sees improved performance in the Downstream Products unit in the second quarter, results in the Raw Materials segment are expected to decrease in the quarter due to a planned one-month outage at the company’s direct reduced iron (DRI) facility in Trinidad. The company also expects operating loss at its steel plant in Louisiana as witnessed in the first quarter.
Nucor is a Zacks Rank #3 (Hold).
Better-ranked stocks in the steel space include LB Foster Co. FSTR, Commercial Metals Co. CMC and Evraz Highveld Steel & Vanadium Ltd. HGVLY, all holding a Zacks Rank #2 (Buy).
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