Steel Dynamics, Inc. (STLD) said Wednesday after the markets closed that it swung to a fourth quarter profit, even as sales declined 8%. However, the company's quarterly earnings per share came in below analysts expectations.
The Fort Wayne, Indiana-based steelmaker reported net income for the fourth quarter of $26.7 million or $0.12 per share, compared to a net loss of $82.7 million or $0.45 per share for the year-ago quarter.
On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.17 per share for the fourth quarter.
In December, Steel Dynamics had forecast fourth quarter earnings in a range of $0.10 to $0.20 per share. In October, the company had indicated an expectation for a slight easing in sheet-related operating rates, lower shipments, and margin compressions at its metal recycling operations that would result in somewhat lower earnings in the fourth quarter than those achieved during the third quarter.
Net sales for the fourth quarter fell 3% to $1.18 billion from $1.21 billion in the same quarter last year. Seven analysts had a consensus revenue estimate of $1.08 billion for the third quarter.
"Our fourth quarter results were within the range we bracketed in December," said Keith Busse, Chairman and CEO. "Our steel operations met our expectations in the fourth quarter, achieving an operating profit of $108.3 million. This was the result of the continued outstanding operating performance at our mills, benefiting in particular from continued strong sales of flat-rolled and engineered-bar steels. OmniSource generated an operating profit of $4.6 million in the quarter, with weaker results due to lower margins and reduced volumes. Continued losses in the steel fabrication segment and costs related to the start-up of Mesabi Nugget also detracted from fourth quarter's results."
The company's steel operations reported net sales of $790.0 million for the fourth quarter, representing 64% of the company's external sales, down 8% from $860.2 billion for the fourth quarter of 2008.
The average selling price per ton for the company's steel operations was $675 in the fourth quarter, an increase of $48 per ton from $627 in the third quarter but a decrease of $238 per ton from $913 in the fourth quarter of last year. Steel shipments for the fourth quarter were 1.2 million tons, 6% lower than the third quarter, but 24% higher than the fourth quarter of 2008.
Fourth quarter quarter net sales from the company's metals recycling and ferrous resources segment, which include ferrous and non-ferrous metals recycling by OmniSource Corp. and Steel Dynamics' Iron Dynamics scrap-substitute operation that produces pig iron for use by the Flat Roll Division, totaled $521.6 million, up 34% from $388.9 million in the same quarter a year ago.
For the full year 2009, the company reported a net loss of $8.2 million or $0.04 per share, compared to net income of $463.4 million or $2.45 per share for the full year 2008.
Net sales for the full year 2009 fell 51% to $3.96 billion from $8.08 billion the previous year.
Analysts expected the company to earn $0.01 per share on revenue of $3.89 billion for the full year 2009.
Looking ahead, the company said its first quarter outlook is for stronger profitability in both its steel operations and in metals recycling. The company expects to provide quantitative guidance later in the quarter.
Among others in the industry, United States Steel Corp. (X) last month reported a net loss for the fourth quarter, hurt by lower average realized price and weak steel shipments.
Also last month, AK Steel Holding Corp. (AKS) reported a profit for the fourth quarter, compared to a net loss in the same quarter in the prior year when results were weighed down by a hefty accounting charge.
Nucor Corp. (NUE) last month reported a 44% drop in third quarter profit, hurt by weak demand for steel from residential and non-residential construction, as well as falling prices. Sales fell 29%. from a year ago.
Steel Dynamics shares, which have traded in a range of $5.95 to $20.47 over the past year, closed Wednesday's regular trading session at $15.92, down 44 cents or 2.69% and lost an additional 64 cents or 3.99% in after hours trading.
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