Schnitzer Steel boosts financial performance in Q4
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Schnitzer Steel boosts financial performance in Q4

The company’s Auto and Metals Recycling segment operating income rose closer to prepandemic levels in the fourth quarter of 2020.

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October 22, 2020

Sales and operating incomes increased in the fourth quarter of 2020 for Schnitzer Steel Industries Inc., Portland, Oregon, when compared with its third quarter of the year. According to the company’s fourth-quarter earnings report, some sales returned to prepandemic levels.

The company’s Auto and Metals Recycling (AMR) segment achieved operating income in the fourth quarter of $15 million, or $17 per ferrous ton, compared with $3 million, or $3 per ferrous ton, in the third quarter of 2020. AMR adjusted operating income of $18 per ferrous ton for the fourth quarter was three times higher than the operating income in the third quarter, the company states.

While AMR’s operating income has improved compared with the third quarter, it’s down slightly from where it was in the fourth quarter of 2019. The segment achieved operating income of $22 million, or $22 per ferrous ton, in the fourth quarter of 2019 comparatively.

Schnitzer attributes AMR’s improved sequential performance to the higher ferrous and nonferrous sales volumes and selling prices, including from higher prices for platinum group metal products. Ferrous sales volumes in the fourth quarter increased by 17 percent sequentially, driven by benefits from commercial initiatives and improved supply flows supported by improving economic activity and the higher market price environment. Schnitzer reports that nonferrous sales volumes in the fourth quarter were 28 percent higher sequentially due primarily to increased supply flows, sales diversification and the timing of shipments.

For the AMR segment, export customers accounted for 72 percent of total ferrous sales volume in the fourth quarter. Ferrous and nonferrous products were shipped to 20 countries in the fourth quarter, with Turkey, Vietnam and Bangladesh representing top export destinations for ferrous shipments, Schnitzer reports.

The company’s Cascade Steel and Scrap (CSS) segment achieved operating income of $8 million in the fourth quarter of 2020, which is an increase of $1 million from the third quarter. This is also up slightly from the operating income achieved in the fourth quarter of 2019. The company says the sequential improvement in operating performance benefited from the 12 percent increase in finished steel sales volumes, supported by commercial sales initiatives and the continued strength of construction demand in the West Coast markets, the company says in its fourth-quarter earnings report.

“These past seven months have been challenging for all of us. We have been confronted with cascading crises, including a global pandemic the likes of which the world has not seen in over a century, a historically significant global recession and natural disasters,” says Tamara Lundgren, chairman and CEO of Schnitzer Steel. “We pivoted quickly to accommodate the operating changes that were necessary in order for us to continue operating safely and effectively in a very volatile market. Our fourth quarter operational and financial results, as well as our full-year results, reflect the agility of our team, the strength of our culture and the resiliency of our platform.

“With the start of our new fiscal year, we have commenced operating under our new One Schnitzer model which we announced in April,” Lundgren adds. “This is the culmination of our evolution to a more simplified operating platform to improve our efficiency and enable greater focus on the critical drivers of our business, including new products and services.”