Steel Markets
CMC posts lower earnings, expects better results from infrastructure spend
Written by Laura Miller
January 8, 2024
CMC saw robust demand from the construction markets in its first fiscal quarter, which ended on Nov. 30, 2023.
| First quarter ended Nov. 30 | 2023 | 2022 | % Change |
|---|---|---|---|
| Net sales | $2,003 | $2,227 | -10% |
| Net earnings (loss) | $176.3 | $261.8 | -33% |
| Per diluted share | $1.49 | $2.20 | -32% |
Despite strong demand, the Irving, Texas-based metals recycler and long product producer saw a 10% year-on-year (YoY) decline in sales to just over $2.2 billion in the quarter. At the same time, net earnings fell 33% to $176.3 million. Compared to the prior quarter, sales and earnings were down 9.3% and 4.3%, respectively.
“Performance in our North America Steel Group was supported by sustained healthy construction activity and near-record margins on our downstream products,” commented CMC’s President and CEO Peter Matt in the company’s quarterly earnings report.
“While steel product margins experienced compression in the quarter, market developments indicate this trend should halt or reverse in the coming months,” he added.
Q1 shipments within CMC’s North America Steel Group, which includes both steel and downstream products, registered a 1.1% YoY rise. Steel product margins were lower, however, as average selling prices declined while the cost of scrap rose, the company said.
Looking forward, Matt said CMC expects increasing infrastructure investments to drive strong construction activity in the spring and summer months.
The company expects its investment initiatives to broaden its exposure to the “favorable structural trends powering domestic construction.” These investments include its Arizona 2 micro mill, which started up last summer, as well as its Steel West Virginia project, currently under construction.
Recall that Commercial Metals Co. rebranded as CMC in October to reflect its growth beyond metals. In addition to running mini and micro mills, CMC fabricates rebar, cables, and fasteners, and offers construction services.
Laura Miller
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