Steel Dynamics expects its second-quarter earnings to be significantly lower than first-quarter results. Adjusted earnings per diluted share are expected to be in the range of $0.40 to $0.44, well below $0.88 per share reported in Q1.
The decline in earnings is due to lower steel demand and selling prices attributed to the temporary closures of steel-consuming businesses during the pandemic. Shelter-in-place mandates also resulted in diminished scrap collection and supply leading to an operating loss for the company’s metals recycling operation.
The restart of automotive production and related supply chains is expected to improve steel demand in the third quarter. Trade protections currently in place will support domestic steel mill utilization by continuing to limit unfairly traded imports, said SDI.
Backlogs in the fabrication segment are strong and nonresidential construction activity appears to be holding steady. Earnings for fabrication are expected to be similar to first-quarter results.
“Even though our second-quarter 2020 earnings are expected to be significantly lower than our robust sequential first quarter, the results are tremendous given the circumstances,” said President and CEO Mark Millett. “Our commercial teams and downstream manufacturing businesses are helping us maintain higher steel production utilization rates, and our metals recycling platform is ensuring our steel mills are receiving the required raw materials.”
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