Steel Products
Olympic Steel Earnings Down by Sales Up
Written by Sandy Williams
February 22, 2013
Written by: Sandy Williams
Despite a record year for sales, Olympic steel reported a disappointing fiscal year with net earnings of $2.3 million after a non-cash goodwill impairment charge of $6.6 million in the fourth quarter. In comparison, net earnings for 2011 were $25.0 million.
Net sales for 2012 were a record $1.4 billion, up 9.7 percent from last year’s record of $1.3 billion. Net sales in the fourth quarter decreased 8.8 percent year over year to $291.7 million.
“During 2012, we made significant progress on a variety of growth and development initiatives. We successfully ramped up several new facilities and completed major capital projects to enhance future profitability,” said Chairman and Chief Executive Officer Michael D. Siegal. “However, the year ended with a disappointing quarter as steel demand and pricing declined in tandem with mounting political and fiscal uncertainty-masking much of our operational headway.”
Chicago Tube & Iron (CTI), Olympic’s tubular and pipe product segment, accounted for 18 percent of Olympic sales in 2012 ($246 million).
Flat rolled tonnage for the year was up 1.4 percent to 1.14 million tons with an inventory turnover rate of four times in 2012. Inventory was higher throughout the year than hoped for due to declining steel prices, longer contract purchases and stocking of new start-up locations. Inventory is expected to decline in the first half of the year and turnover rate to improve.
Capital expenditures will be lower in 2013 at $15 million. One major project is planned for the year, an expansion of the tubular and pipe products facility in St. Paul that has outgrown its facility capacity.
David Wolfort, President and Chief Operating Officer had this to say on plate and scrap prices:
July was the low end of the market until October occurred. And then there was a $20 a ton delta. Between the low end, at least, from our perspective – between the low end of July and the low end of October, that has all come back. That’s recovered and we see flat pricing.
Scrap moved sideways in December and January. You’re right, it’s down $9, $10 a ton for February. Expectations are that it’s going to go up and probably be up in March and probably equal to where it was in January. So again, much like you’ve written early on in the fourth quarter and quite frankly, we think you’re spot on, we see flat prices for the year and we’re just in that flat price mode right now. So, we don’t see much deflection on pricing in the first quarter.
Sandy Williams
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