Steel Dynamics Loss Widens
26 January 2016 - 12:00PM
Dow Jones News
Steel Dynamics Inc. on Monday reported a wider fourth-quarter
loss as it booked $435 million in charges largely tied to its
beleaguered metals-recycling operations.
The Fort Wayne, Ind., company had warned last month the
recycling segment, which accounts for roughly 40% of annual
revenue, would go into the red.
Shares, largely flat in late trading, closed Monday at $15.96,
down 6% over the past 12 months and just above a 52-week-low set
last week.
Over all, the steelmaker and metals recycler reported a loss of
$253.2 million, or $1.04 a share, compared with a year-earlier loss
of $45 million, or 19 cents a share. Excluding impairment charges
and other items, Steel Dynamics reported a profit of nine cents a
share, compared with 40 cents a year earlier.
The company had projected profit of three cents to seven cents a
share.
Revenue, meanwhile, fell 37% to $1.59 billion.
Analysts surveyed by Thomson Reuters had projected seven cents a
share on $1.7 billion in revenue.
Gross margin narrowed to 9.1% from 11.6% a year earlier.
Oversupply—exacerbated by an economic slowdown in China, the
world's largest steel producer and user—has battered the sector,
driving down steel prices and forcing steelmakers to idle mills and
lay off workers.
The benchmark hot-rolled coil price in the U.S. is down about
32% over the past 12 months to $400 a ton.
The average steel product selling price fell to $614 a ton, from
$806 a ton a year earlier and $665 during the previous quarter, the
company said. Meanwhile, the average ferrous scrap cost per ton
melted fell to $205, from $346 a year earlier and $252 in the
preceding quarter.
The steel production utilization rate declined to 73%, compared
with 84% in the year-earlier period and 82% in the previous
quarter.
Founded in 1993 as a "minimill" to make steel from scrap metal,
Steel Dynamics has expanded into one of the largest carbon steel
producers in the U.S. But like its industry peers, Steel Dynamics
has been battered by sharply lower prices brought on by a global
supply glut as less-expensive imports, helped by the stronger U.S.
dollar, flood the market.
As a result, unfair trade complaints have proliferated, both in
the U.S. and abroad. Last month, India imposed an antidumping tax
on some steel imports, including cold-rolled stainless steel
products from the U.S.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
January 25, 2016 19:45 ET (00:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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