Nucor Announces Guidance for Its Second Quarter Earnings
OREANDA-NEWS. June 15, 2012. Nucor Corporation (NYSE: NUE) announced guidance for its second quarter ending June 30, 2012. Nucor expects second quarter results to be in the range of USD 0.35 to USD 0.40 per diluted share, reported the press-centre of Nucor.
These projected results include an expected impairment charge related to our Duferdofin Nucor S.r.l. joint venture of approximately USD 30 million (USD 0.09 per diluted share). This performance, excluding the expected impairment charge, is somewhat below the qualitative guidance presented in our first quarter earnings release and conference call which stated, "For the second quarter of 2012, we currently expect to see only a modest improvement in earnings."
Excluding the impact of the impairment charge, this range is lower than 2011 second quarter earnings of USD 0.94 per diluted share and is similar to the first quarter of 2012 earnings of USD 0.46 per diluted share. Projected second quarter results include an estimated LIFO credit of USD 14.5 million (USD 0.03 per diluted share) compared to charges of USD 14.5 million in the first quarter of 2012 (USD 0.03 per diluted share) and USD 32 million in the second quarter of 2011 (USD 0.06 per diluted share).
In our first quarter 2012 Form 10-Q filing we noted, "Steel market conditions in Europe have continued to be challenging through the first quarter of 2012, and, therefore, it is reasonably possible that based on actual performance in the near term the estimates used in our valuation as of December 31, 2011 could change and result in an impairment of our investment." Operating performance at Duferdofin Nucor has continued well below budgeted levels through the first half of 2012. This trend, combined with the recently escalated economic and political turmoil in Europe, caused Nucor to conclude that Duferdofin Nucor had a triggering event requiring assessment for impairment in the second quarter. The estimated impairment charge reflects the impact on our impairment valuation model of both deeper losses in the near term and a slower projected recovery to historic operating performance levels.
Our lower performance in the second quarter of 2012 is mainly due to a surge in imports, particularly rebar, plate and sheet steel, which began at the end of 2011 and has continued through the first half of 2012. Although the U.S. market continues to show stable to slightly improving demand for steel, this surge in imports has undercut seasonal pricing momentum that is normally experienced early in the calendar year. In addition, U.S. markets are also being negatively impacted by the influence of new domestic supply that ramped up production in 2011 and a combination of political and economic uncertainty in global markets that is beginning to affect steel buyer confidence. In the short term, lower scrap pricing is also hurting the operating performance of our scrap processing business. However, the lower pricing will have a positive operating benefit on the performance of our steel mills as these lower scrap prices work their way into the cost of scrap used. Despite continued weak construction markets, all three of our major construction products groups (rebar fabrication, joist and decking and pre-engineered metal buildings) earned a profit in May as we have continued to drive down costs, improve market position and grow our competitive advantages. The strongest end markets continue to be manufactured goods including heavy equipment, energy and automotive.
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 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 outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2011 Annual Report on Form 10-K. 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.