CHARLOTTE, N.C., March 19, 2015 /PRNewswire/ -- Nucor Corporation
(NYSE: NUE) announced today guidance for its first quarter ending
April 4, 2015. Nucor expects first
quarter results to be in the range of $0.10
to $0.15 per diluted share. This range is a decrease
from the first quarter of 2014 earnings of $0.35 per diluted share and a decrease from the
fourth quarter of 2014 earnings of $0.65 per diluted share. Additionally, this range
is below the qualitative guidance presented in our fourth quarter
of 2014 earnings release and conference call which stated, "We
currently expect that first quarter of 2015 earnings will decrease
from the fourth quarter of 2014 to a level slightly exceeding the
first quarter of 2014."
Overall operating performance at the steel mills segment for the
first quarter of 2015 is expected to decrease significantly
compared to the fourth quarter of 2014 primarily due to lower
selling prices and margins resulting from the exceptionally high
level of imports flooding the domestic market. Total imports
increased 38% in 2014 compared to 2013, with imports accounting for
approximately 34% of the total domestic shipments in 2014. Import
levels gained momentum throughout 2014, as the imports in the
second half of the year were 10% higher than in the first half.
This trend has continued in 2015, with January total imports
accounting for approximately 39% of total January domestic
shipments, a 37% increase from January
2014. Global overcapacity built by state-owned enterprises
is the biggest risk factor to our business.
Although all steel prices are being driven lower by imports, the
sheet market is experiencing the greatest impact. Published index
pricing indicates that hot-band prices at the end of 2014 decreased
11% from its peak level in the third quarter of 2014. Through
mid-March 2015, hot-band pricing has
decreased an additional 19% from the end of 2014. We expect that
steel mill margins for all products should improve in the second
quarter as we begin to realize the benefits of lower raw materials
costs and selling prices begin to stabilize. It is our current
expectation that although imports will subside in the second
quarter, they will remain at excessively high levels.
Conditions remain challenging in energy markets, in which the
collapse in oil prices and continued high levels of imported oil
country tubular goods products has caused an inventory glut in the
pipe and tube sector. Automotive markets remain strong and are
continuing to improve. We continue to see improving demand in the
nonresidential construction markets. Once energy market steel
inventories are rebalanced later this year, we expect overall steel
demand to meet or exceed levels seen in 2014.
The overall operating performance of the downstream products
segment for the first quarter of 2015 is expected to decrease from
the fourth quarter of 2014 due to typical seasonality experienced
in the first quarter; however, the results of the downstream
products segment in the first quarter of 2015 are expected to
increase over the first quarter of 2014 due to both lower input
costs and improved volumes, supporting the resiliency of the slow
but steady growth in nonresidential construction markets. The
operating performance of the raw materials segment for the first
quarter of 2015 is expected to decrease from the fourth quarter of
2014 due to an anticipated operating loss of approximately
$37 million ($0.08 per diluted share) at Nucor Steel Louisiana
and decreased performance of our scrap processing business and
natural gas drilling working interests.
Projected first quarter of 2015 results include an estimated
LIFO credit of $16.0 million
($0.03 per diluted share), compared
to a credit of $57.3 million
($0.11 per diluted share) in the
fourth quarter of 2014 and a charge of $14.5
million ($0.03 per diluted
share) in the first quarter of 2014. LIFO charges or credits for
interim periods are based on management's current estimates of both
inventory costs and quantities expected at year-end, and that full
year estimate is incurred ratably over the remainder of the year.
Included in the fourth quarter of 2014 results were $8.9 million ($0.02
per diluted share) of non-cash inventory related purchase
accounting charges associated with the acquisition of Nucor Steel
Gallatin and a $13.2 million
($0.04 per diluted share)
out-of-period non-cash gain related to a correction to tax
balances. Included in the first quarter of 2014 earnings was
a $12.8 million ($0.04 per diluted share) charge primarily
related to tax legislation changes in the state of New York
and a $9.0 million charge ($0.02 per diluted share) related to the
disposal of assets within the steel mills segment.
The production operations of Nucor Steel Louisiana have remained
suspended since the equipment failure related to the process gas
heater occurred on November 2, 2014.
We are close to completing the necessary repairs and adjustments to
the process gas heater, and we estimate that Nucor Steel Louisiana
will be operational before the end of the first quarter of
2015.
Nucor and affiliates are manufacturers of steel products,
with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and
alloy steel -- in bars, beams, sheet and plate; steel piling; steel
joists and joist girders; steel deck; fabricated concrete
reinforcing steel; cold finished steel; steel fasteners; metal
building systems; steel grating and expanded metal; and wire and
wire mesh. Nucor, through The David J. Joseph Company, also
brokers ferrous and nonferrous metals, pig iron and HBI/DRI;
supplies ferro-alloys; and processes ferrous and nonferrous
scrap. Nucor is North America's largest
recycler.
Certain statements contained in this news release are
"forward-looking statements" that involve risks and uncertainties.
The words "believe," "expect," "project," "will," "should," "could"
and similar expressions are intended to identify those
forward-looking statements. Factors that might cause the
Company's actual results to differ materially from those
anticipated in forward-looking statements include, but are not
limited to: (1) the sensitivity of the results of our operations to
prevailing steel prices and the changes in the supply and cost of
raw materials, including scrap steel; (2) market demand for steel
products; (3) energy costs and availability; and (4) competitive
pressure on sales and pricing, including competition from imports
and substitute materials. These and other factors are
discussed in Nucor's regulatory filings with
the Securities and Exchange Commission, including those
in Nucor's December 31, 2014 Annual Report on Form
10-K, Item 1A. Risk Factors. The forward-looking
statements contained in this news release speak only as of this
date, and Nucor does not assume any obligation to update
them.
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SOURCE Nucor Corporation