Steel Mills

CMC earnings slide, but still near top mark

October 17, 2024

CMC

Fourth quarter ended Aug. 31	2024	2023	Change
Net sales	$1,996.1	$2,209.2	-9.6%
Net income (loss)	$103.9	$184.2	-43.6%
Per diluted share	$0.90	$1.56	-42.3%
Full year ended Aug. 31
Net sales	$7,925.9	$8,799.5	-9.9%
Net income (loss)	$485.5	$859.7	-43.5%
Per diluted share	$4.14	$7.25	-42.9%

(in millions of dollars except per share)

Earnings Results

In its latest quarterly earnings statement, CMC reported solid demand despite increased headwinds from uncertainty regarding interest rates and the outcome of US elections.

CMC’s fiscal fourth-quarter sales dropped 9.6% from a year earlier, while net income plummeted 43.6% (see chart). For fiscal year 2024, sales were down nearly 10% from the prior year, while net income dropped 43.5%, the Irving, Texas-based longs producer and metal recycler said on Thursday.

President and CEO Peter Matt noted that the company “felt the impact of increased macroeconomic and political uncertainty.”

In North America, Q4 finished steel volumes totaled 759,000 short tons (st), down 0.7% sequentially but up 0.3% year over year (y/y). Average selling prices were down by $89/st, while the cost of scrap utilized dropped by $17/st. This resulted in steel product margins over scrap declining by $72/st compared to last year.

Rebar and merchant bar products had average selling prices of $667/st in the quarter, down 2.1% vs. the previous quarter and 2.2% lower than the year-ago quarter.

Raw material shipments in North America were 3% lower sequentially but 5% higher y/y at 360,000 st. The average selling price of raw materials was $866/st in Q4’24, a 10.7% decrease from $970/st in the prior quarter but 3.3% above Q4’23.

In Europe, where CMC operates a mill in Poland, the steel group faced challenges from increased imports and supply discipline among domestic producers. Net sales for the region improved 6% quarter on quarter but were down 19% y/y to $222.1 million. Steel shipments of 391,000 st were 32% higher sequentially and 0.5% better than the year-ago quarter.

Outlook

Matt expressed excitement about the strategic path forward despite anticipating a sequential decline in fiscal Q1’25 earnings. “Current market conditions represent a transient period of softness created by uncertainty regarding important factors that influence any major capital investment – the cost of funding and future government policy,” he commented.

He added that “clarity will emerge in the coming months,” with expectations of renewed strength in CMC’s core markets.

Expansions updates

The ramp-up of CMC’s Arizona 2 (AZ2) micro mill continues, with merchant bar quality (MBQ) commissioning progressing, the company said. It previously disclosed a full run rate target of 500,000 st, 350,000 st of rebar, and 150,000 st of merchant bar.

“We continue to feel good about our progress in increasing operating levels,” Matt said, adding that they expect to be “at or near” the targeted full run rate at the end of 2025.

Meanwhile, construction continues on CMC’s fourth micro mill in West Virginia. It remains on target to commission the 500,000-st-per-year facility late in 2025.

David Schollaert

David Schollaert is deputy editor-in-chief for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. He can be contacted at david@steelmarketupdate.com or 724-720-1008.