Commercial Metals reported net earnings of $78 million on net sales of $2 billion for the most recent quarter, ranking it as the company’s strongest third quarter. This compares with net earnings of $71.7 million on sales of $1.7 billion the same time last year.
Net earnings for the first nine months were a record $227.7 million on net sales of $5.3 billion. For the same period last year, earnings were $202 million on sales of $4.9 billion. Stanley Rabin, CMC chairman and CEO, said, "It was another remarkable quarter. We generated solid to excellent results in each of our business segments. Market conditions for steel and related products showed significant further improvement during the quarter, while nonferrous metal prices hit all-time highs before undergoing some correction. Global economic growth accelerated, stimulated by strong business investment and industrial production, including some pickup in Europe. Our outlook for the fourth quarter remains very positive. "
Rabin said, "Our Domestic Mills segment's adjusted operating profit at $69.7 million was 15 percent above last year's historically strong third quarter. Moreover, the LIFO expense was $14.8 million pre-tax in this year's third quarter compared with $8.0 million income last year. Net sales increased 23 percent."
Rabin continued, "Within the segment, adjusted operating profit for our steel minimills was 4 percent greater than a year earlier, including the big swing in LIFO, on 15 percent higher net sales. The strength of higher selling prices combined with higher finished goods shipments more than offset higher raw material costs. Compared with last year's third quarter, the metal spread increased by 8 percent to $298 per ton. On a year-to-year basis, tonnage melted for the third quarter was down 5 percent to 557,000 tons while tonnage rolled was 572,000 tons, 5 percent above last year's third quarter. Shipments increased 5 percent to 640,000 tons. Our average total selling price was up $39 per ton to $515 per ton, while the average selling price for finished goods was up by $40 per ton to $530 per ton.
According to Rabin, "The recycling segment achieved a record third quarter with net sales up 61 percent compared with one year ago, marked by historically high nonferrous price levels. The adjusted operating profit of $22.5 million was up 43 percent from last year's third quarter. LIFO expense was $10.1 million pre-tax this quarter versus an expense of $1.8 million the prior year. The ferrous scrap market was still strong, less volatile, and prices were higher than the third quarter of last year. Versus last year, the average ferrous scrap sales price for the quarter increased by 14 percent to $210 per short ton while stock shipments of ferrous scrap rose 18 percent to 577,000 short tons. The average nonferrous scrap sales price for the quarter jumped nearly 60 percent compared with a year ago, while nonferrous stock shipments were 12 percent higher. Inventory turnover across the board remained extremely rapid. The total volume of scrap processed, including all our domestic processing plants, equaled 976,000 tons against 869,000 tons last year.
Rabin continued, "Generally robust global economic conditions prevail. Some deceleration of economic growth is expected, but our key end-use markets remain strong. The global steel market is firm for virtually all products, reflecting strong demand and low inventories around the world. Manufacturing activity continues to expand. While residential construction in the U.S. has pulled back from its peak, worldwide non-residential construction is expected to strengthen further. More specifically, construction materials generally are in strong demand. Our domestic steel mill markets, if anything, are showing further strengthening. While imports of carbon steel bar products recently have increased sharply into the U.S., strong demand appears to be absorbing the supply. Our mill shipments in the U.S. and Poland will remain strong during the fourth quarter, and realized steel prices should move yet higher. Steel scrap prices are at a 12-month high, both domestically and internationally, and are up again in June. The outlook for nonferrous markets remains favorable, although varying price corrections from the record highs occurred recently. Demand for downstream products and services remains vibrant, but we will experience some short-term margin squeeze because of the recent rise in mill prices.