The Auto and Metals Recycling (AMR) division of Schnitzer Steel Industries Inc., headquartered in Portland, Oregon, delivered its best first-quarter performance since fiscal 2012 in the first quarter of fiscal 2017, which ended Nov. 30, 2016, according to the company. Schnitzer credits the improved performance to higher benefits achieved from the successful execution of cost reduction and productivity initiatives and improved market conditions.
The company’s Steel Manufacturing Business (SMB) division saw continued pressure from low-priced imports on finished steel selling prices and volumes, combined with the higher operating costs associated with a major equipment upgrade and maintenance downtime, which adversely affected results as compared with the 2016 fiscal year and its fourth quarter.
Overall, Schnitzer has reported a loss per share from continuing operations of 5 cents for the first quarter of fiscal 2017 and an adjusted loss per share from continuing operations of 3 cents. Reported and adjusted first-quarter results include an adverse impact on operating costs in the SMB of approximately $2.5 million, or 9 cents per share, resulting from outages related to the equipment upgrade and maintenance downtime. In comparison, the company had a loss per share from continuing operations of 19 cents in the first quarter of fiscal 2016 and an adjusted loss per share from continuing operations of 13 cents.
Schnitzer says it currently expects its AMR operating income for the second quarter to increase sequentially and year over year driven by continued improvements in market conditions for recycled metals. AMR’s second quarter performance is expected to reflect higher ferrous average selling prices and sales volumes and an anticipated favorable impact from average inventory accounting, as well as continued benefits from previously announced cost reduction and productivity initiatives, the company says.
Schnitzer currently anticipates its SMB second quarter performance to be slightly improved from the first quarter in light of higher selling prices, with the elimination of the expenses associated with the equipment upgrade expected to be offset by higher raw material costs and higher inventory costs associated with low production volumes resulting from the downtime.
“In the first quarter, AMR delivered a substantial increase in operating income compared to the prior year quarter largely due to the increased contributions from the successful implementation of our cost savings and productivity initiatives,” says Tamara Lundgren, Schnitzer Steel president and chief executive officer. “In the second quarter, our expectations for improved performance are underpinned by the stronger market environment that we are experiencing, as well as [by] continued progress on our strategic initiatives to reduce costs, deliver internally-generated synergies and drive further productivity initiatives.”