Service Centers

Russel Metals Earnings Double in 2017

Written by Tim Triplett

Russel Metals Inc., the Toronto-based steel distributor, reported positive results in its fourth-quarter and year-end earnings report, driven by sales to the energy sector. Net income for the company totaled $124 million on revenues of $3.3 billion in 2017, a significant improvement from the $63 million earned on sales of $2.6 billion in 2016.

The distributor ended the year strong with fourth-quarter sales of $825 million and earnings of $28 million. Revenues in the company’s service center segment totaled $418 million, 27 percent higher than the 2016 fourth quarter due to the acquisition of Color Steels, as well as stronger demand and higher selling prices.  Same store tons shipped increased 13 percent and same store selling price per ton increased by 9 percent over the comparable 2016 quarter. Fourth-quarter service center operating profits totaled $16 million compared to $7 million in the prior-year quarter due to stronger activity and operating efficiencies.

Fourth-quarter 2017 revenues in Russel’s energy products segment increased 24 percent to $300 million due to stronger demand and higher selling prices. Operating profits in the quarter hit $28 million, up from $5 million in the same quarter last year.

Revenues in Russel’s steel distributors segment jumped by 32 percent in the fourth quarter to $104 million, vs. fourth-quarter 2016.  Operating profits in the fourth quarter were about the same as last year as stronger revenues were offset by lower gross margins.

“Our service center and steel distribution operations turned in another solid performance for the quarter as strong activity offset the usual seasonal demand decrease. Demand for our energy product operations continued at a healthy level. Improved selling prices and previously implemented operating efficiencies led to stellar results for all of our energy operations,” commented John G. Reid, president and COO.

So far in 2018, Russel has seen a modest demand increase in a rising steel price environment, he added. “We are continuing to evaluate growth opportunities and systematically increase our value-added equipment across North America.”

Management at Russel is keeping an eye on the Section 232 debate in the United States, since prices in Canada tend to track with the U.S. The threat of U.S. trade action has already raised steel prices, and passage of some measure could potentially boost prices further. “Right now, it’s something we will have to react to, but we have no idea what the outcome is going to be,” Reid said.

Russel Metals is Canada’s second largest metals distributor behind Samuel, Son & Co., and is ranked among the Top 10 North American service centers.

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