Commercial Metals Co. reported net earnings of $40.5 million for the year, sharply higher than last year’s earnings. Additionally, the company reported net sales of $2.4 billion for the year ended August 31. Cash flows from operations for the year were $107 million. Fourth quarter net earnings were $9.0 million on net sales of $673 million. For the fourth quarter, cash flows from operations were $30 million.
Stanley Rabin, chairman, president and CEO of CMC, said, "Our results for the year were relatively good under very challenging circumstances. However, our results for the fourth quarter were below our expectations; conditions in our important end use markets generally showed little improvement and in some instances deteriorated, and our average selling prices declined in most parts of our Manufacturing segment. Our vertical integration, product diversification and geographic dispersion all contributed to our relatively better performance for the fiscal year. In a sense, our track record is proven more in difficult times than in good. Major positives for the year included solid results in steel manufacturing and fabrication, decent earnings in copper tube production, a turnaround in Recycling and improved profitability in Marketing and Distribution. The principal negative factors were the persistent global economic slowdown and very high import levels at depressed prices in some of our major product lines, which was not offset by those of our businesses that benefited from higher imports. Domestic competition, in turn, became even more aggressive.
"Year to date operating profit for our four steel mills was 27 percent above fiscal 2001 because of turnarounds at the South Carolina and Alabama mills and steady results at the Arkansas mill, which more than offset a reduced profit at the Texas mill (it was still a very solid year for SMI-Texas). The principal factor for the earnings improvement was higher volume, whereas selling prices were abysmal and increases met resistance. In addition, our product mix was less than optimal with significant quantities of lower value-added, semi-finished billets shipped.
“For the year, tons melted and rolled increased 17 percent and 19 percent, respectively, while shipments rose 14 percent to 2.2 million tons. During the second half of the year raw material and other input costs increased significantly while mill prices edged only slightly higher. The average annual mill selling price was $15 per ton below last year, while the average selling price for finished goods plummeted a like amount. Fourth quarter comparisons were similar. Reinforcing bar, merchant bar and light structural prices all were, simply put, atrocious. Conversely, the average annual scrap purchase cost was up $6 per ton, and rose $17 per ton for the fourth quarter compared with last year. Utility costs declined nearly $2.4 million compared with the previous year, although in the fourth quarter they increased by $800,000 against the fourth quarter of fiscal 2001."
"The Secondary Metals Processing Division had a much better fiscal 2002, led by a major improvement in the steel scrap market in the second half of the year, albeit from very depressed levels. Conversely, nonferrous markets remained under considerable price pressure. Total tons shipped year-to-year were up 8 percent. The net effect was that gross margin increased by 11 percent. Results were aided as well by increased productivity, high asset turnover and reduced costs. Versus last year, the average ferrous scrap price rose by $6 per ton to $81 per ton and shipments increased 10 percent to 1.5 million tons. The fourth quarter average ferrous price was $92 per ton, or $18 per ton above the prior year's fourth quarter. The average nonferrous scrap price for the year was approximately 9 percent lower than a year ago at only $947 per ton while nonferrous shipments were essentially flat. Total volume of scrap processed during fiscal 2002, including our CMC Steel Group operations, reached 2.6 million tons, up 11 percent from 2001."