Nucor Announces Guidance For Its Fourth Quarter Earnings
Projected fourth quarter of 2016 results include an estimated LIFO expense of
Trade cases initiated by the U.S. steel industry targeting several product groups are having a positive impact as steel imports are down approximately 19% this year compared to last year. Affirmative final determinations announced earlier this year in cases involving three flat-rolled products - corrosion-resistant, cold-rolled and hot-rolled steel - are an important step in returning fair trade to the U.S. flat-rolled steel market. In addition, the
The expected decline in earnings in the fourth quarter of 2016 compared to the third quarter of 2016 is primarily due to lower margins in the steel mills segment, with the most significant impact at our sheet mills. The performance of the raw materials segment in the fourth quarter of 2016 will decline significantly compared to the third quarter of 2016 as it returns to a loss position due to lower pricing at our DRI facilities in the fourth quarter. We expect decreased profitability for our steel products segment in the fourth quarter of 2016 as compared to the third quarter of 2016 due to end of year seasonality that is typical in the fourth quarter.
Market conditions for the steel mills segment have been marked by volatility in sales prices and demand during 2016. Looking ahead to 2017, we are optimistic about continued improvement in market conditions. Prices have increased throughout the fourth quarter for our sheet, bar, structural and plate mills. Scrap and other commodities prices have been increasing as we approach the end of the year. Service center inventory levels remain low. We believe higher input costs and declining imports are now causing the market to find an improved and more sustainable level that we expect to benefit 2017.
Nucor and its affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; hollow structural section tubing; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.
Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should," "could" and similar expressions are intended to identify those forward-looking statements. Factors that might cause the Company's actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) competitive pressure on sales and pricing, including competition from imports and substitute materials; (2) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (3) market demand for steel products; and (4) energy costs and availability. These and other factors are discussed in
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