Nucor reports record profits

Nucor reports record profits

Steelmaker netted $1 billion in the first half of 2018.

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July 20, 2018
Edited by Brian Taylor

Charlotte, North Carolina-based Nucor Corp. has reported what it refers to as record-setting second quarter profits in 2018 and a first half of the year that saw it reap $1 billion in net earnings.

The electric arc furnace (EAF) steelmaker, which also owns Cincinnati-based scrap firm The David J. Joseph Co. (DJJ), has announced second quarter 2018 consolidated net earnings of $683.2 million, or $2.13 per diluted share, which Nucor says are “the highest second-quarter earnings in the company’s history.”

That $683 million figure compares with net earnings of $354.2 million, or $1.10 per share, in the first quarter of 2018 and $323 million, or $1 per share, in the second quarter of 2017.

In the first half of 2018, Nucor’s net earnings have checked in at $1.04 billion, or $3.23 per share. That compares with a 2017 first-half figure of $680 million, or $2.11 per share.

“We are pleased to report record second-quarter earnings that reflect our success over the last several years positioning Nucor to take advantage of an upturn in the steel market,” says John Ferriola, Nucor chairman, CEO and president. “We have increased our workforce by 18 percent and invested $8 billion since the last cyclical peak in 2008. Now, against the backdrop of a strong market and economy, we are capitalizing on those investments to move up the value chain and profitably grow our company.”

The company indicates it was able to charge an average of 12 percent more for its steel products in the second quarter of 2018 compared with the previous quarter and 17 percent more compared with the second quarter of 2017.

Nucor’s scrap and scrap alternative costs also have increased, however. “The average scrap and scrap substitute cost per ton used during the second quarter of 2018 was $373, an 11 percent increase compared to $337 in the first quarter of 2018 and an increase of 19 percent compared to $313 in the second quarter of 2017,” the steelmaker states in notes accompanying its results.

The EAF steelmaker experienced a profitable first half of 2018 despite noting that “the average scrap and scrap substitute cost per ton used in the first half of 2018 was $355, an increase of 19 percent from $298 in the first half of 2017.”

Looking ahead to the third quarter, Nucor indicates it expects its earnings to further improve compared to the second quarter of 2018. “The performance of the steel mills segment is expected to remain strong, [with] margin expansion expected primarily at our sheet and plate mills,” states the firm.

The EAF steelmaker’s earnings comments continue, “Based on the current steel market fundamentals and communications with our customers, we believe there is sustainable strength in steel end-use markets. We expect third quarter of 2018 performance of our steel products segment to be similar to the second quarter of 2018.”

Regarding scrap division DJJ and Nucor’s direct reduced iron (DRI) operations, Nucor predicts, “The performance of our raw materials segment is expected to decrease in the third quarter of 2018 as compared to the second quarter of 2018 due to margin compression.”