Nucor reported sequentially higher second quarter earnings but warned that results would be worse in the third quarter.
“We expect earnings in the third quarter of 2023 to decrease compared to the second quarter of 2023,” the company said in comments released with Q2 earnings results on Monday, July 24.
The Charlotte, N.C.-based steelmaker posted net income of $1.46 billion in Q2’23, up 28% from $1.14 billion in Q1’23 but off 43% from $2.56 billion in Q2’22 on sales that dropped 19% to $9.52 billion year over year.
Nucor said margin expansion at its sheet mills helped drive sequentially higher earnings as did increased volumes in the steel products segment and improved profitability at its direct-reduced iron (DRI) facilities.
But the company’s total steel shipments stood at 6.0 million tons in Q2, down 7% from 6.4 million tons a year earlier. Plate products, however, bucked the overall trend, rising 10% to 520,000 tons.
Nucor said that overall operating rates at its steel mills were 84% in Q2, up from 79% in Q1 but off from 85% a year earlier.
Start-up costs related to its growth projects were ~$90 million in Q2, up from ~$82 million in Q1 and from ~$60 million in the same period a year earlier, the company said.
Recall that on the flat-rolled side alone, Nucor is expanding capacity at its Gallatin sheet mill in Kentucky while also starting up a plate mill in Brandenburg, Ky., and building a new sheet mill in West Virginia.
“The investments we’ve made in recent years to grow our core and expand into new markets are generating strong returns for stockholders and further position Nucor as a highly efficient industrial manufacturer,” Nucor chair, president, and CEO Leon Topalian said in a statement.
Looking ahead, Nucor expects Q3 earnings to decrease vs. Q2. The company cited “decreased profitability, with the largest impact at our sheet mills.” For its steel products segment in general, Nucor expects earnings to “moderate” in Q3. Finally, in its raw materials segment, the company expects earnings to fall sequentially in Q3 “due to margin compression at our DRI facilities and scrap-processing operations.”
By Ethan Bernard, email@example.com
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