Charlotte, North Carolina-based Nucor Corp. says it expects second-quarter 2020 earnings to be in the range of 10 to 15 cents per diluted share. The forecasted profits for the scrap-fed electric arc furnace (EAF) steelmaker would be higher than the 7 cents per diluted share earned in the first quarter of the year, but down significantly from second quarter 2019 earnings of $1.26 per diluted share.
“Nucor’s better-than-expected second quarter performance reflects both the power of our culture and the strength of our business model,” states Leon Topalian, the company’s president and CEO. “By working hard and working together, the 27,000 men and women on the Nucor team have done an excellent job of taking care of each other, our customers and our shareholders.”
Partially hampering first quarter 2020 earnings were what Nucor calls “losses on assets of $288 million, or 92 cents per diluted share, related to our equity method investment” in Italy-based Duferdofin Nucor S.r.l. Output at that facility was halted because of COVID-19 impacts on March 12.
“Many state and local governments are taking actions to phase-in the gradual re-opening of their economies as we progress through the COVID-19 pandemic,” Topalian says. “The enterprise-wide efforts to conserve cash and support our teammates during the COVID-19 pandemic as described in our first quarter earnings release and 10-Q have not changed significantly, and we will proceed with caution during these uncertain times.”
The company credits a second quarter operating performance that “has been better than expected” as a key factor in Nucor retaining profitability. “Though overall market conditions are still challenged by the pandemic, demand in nonresidential construction has been resilient during this time,” the company says.
Nucor says that while automotive production in the United States was halted because of COVID-19 concerns, “We are [now] seeing a strong rebound in automotive-related steel demand. The automotive industry experienced better than expected sales during their outage period resulting in low inventory levels as we enter the third quarter of 2020.”
The company says its scrap and raw materials segment “has been challenged by decreased pricing for raw materials and the impact of an outage at our direct reduced iron (DRI) facility in Trinidad to comply with that country’s stay at home orders.”
The steelmaker concludes, “We believe Nucor is well positioned to navigate any future challenges that arise from these current situations given our advantaged cost position, flexible production capability and financial strength.”