Scrap metals recycling company Schnitzer Steel Industries, Inc. (SCHN: Quote) announced Tuesday several initiatives to cut costs and to realign the "organization to support our future growth" following the "acquisitions and technology investments" it made in fiscal 2011.
Schnitzer Steel is one of the largest manufacturers and exporters of recycled ferrous metal products in the U.S.
The actions will include laying off about 300 employees or 7 percent of the company's current workforce as well as further integration of the metals recycling and auto parts businesses, streamlining of corporate functions, and reducing organizational layers.
The company expects the restructuring to help it overcome the effects of falling metal prices amid the slower global growth rates, economic uncertainty, and the stronger US dollar.
The completion of the restructuring, expected by the end of the first quarter of fiscal 2013, will see higher earnings and increased shareholder returns.
These initiatives are expected to lead to annual operating costs savings of $25 million, and total restructuring charges of about $12 million, with $5 million to be incurred in the fourth quarter of fiscal 2012.
Looking ahead to the fourth quarter, the company expects earnings to be about break-even for the quarter, before restructuring charges of about $0.12 per share.
On average, 9 analysts polled by Thomson Reuters currently expects the company to report earnings of $0.24 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Providing a market outlook for the fourth quarter, the Portland, Oregon-based company said the sharp drop in commodity prices is expected to sequentially reduce revenues by 15 to 20 percent in its auto parts business in the fourth quarter.
In the metals recycling business, a 10 to 15 percent sequential decline is expected in ferrous average net selling prices and ferrous sales volumes in the fourth quarter due to reduced flows of raw materials.
In the steel manufacturing business, volume increases of about 15 percent are expected to be more than offset by a decline in average selling prices of slightly more than 5 percent from the third quarter.
In Tuesday's regular trading session, SCHN is currently trading at $28.92, down $0.23 or 0.79% on a volume of 0.30 million shares.
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by RTT Staff Writer
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