Olympic Steel, a metals service center headquartered in Cleveland, Ohio, reported net sales of 376.6 million for third quarter, an increase of 23.9 percent year over year and a new third quarter sales record. Net sales on flat products totaled $312 million while sales for tubular and pipe products totaled $63.8 million. Flat rolled shipments increased by 22 percent to 324,000 tons.
Tolling volume was 29,000 tons vs. 20,000 tons last year; year to date 81,000 tons and 61,000 tons in the same period in 2013.
Net income for the third quarter increased 16% to $1.6 million and was impacted by $0.2 million in pre-tax LIFO expense related to the tubular and pipe products segment.
The company expects to reduce inventory by $25 million by the end of the quarter; $9-$10 million of that goal has been reached already in the fourth quarter. Another $25 million inventory reduction is anticipated for Q1 2015. Reducing freight costs in another target and the company plans to focus on sourcing from mills close to home. Redistribution of inventory will result in lower inbound and outbound freight costs that impact margins.
Olympic continues to reduce headcount to improve productivity and efficiency. “There are always headcount issues,” said Michael Siegal, Chairman and CEO. “Are you the right size for business you have and the right size for the business you want to have.” “So I think we will probably see some headcount reductions…we don’t have a number for you right now but it will be lower.”
President and COO David Wolfort noted, “Market market prices peaked in the third quarter reaching an unsustainable premium of $200/ton over world export prices, resulting in a surge of imports, which have record levels this year and are putting downward pressure on the market.” Flat rolled prices fell from$680 to $640/ton by the end of the quarter.
When asked if Olympic Steel plans to purchase more imports, Wolfort said, “Our goal is to have the most efficient cost of goods in house and to have a reliable multiple sources, multiple sources. The problem with foreign, quite frankly as we like to say, and as we’ve said for 30-40 years, foreign product comes in on time, it comes in late and comes in early and it all comes in on the same boat. So it’s very hard to manage inventory if you are going to be very heavy on the foreign side.”
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