Commercial Metals Company reported net earnings of $24.3 million and net sales of $2.4 billion for the year ended August 31. This compares with net earnings of $46.3 million on sales of $2.7 billion last year.
Fourth quarter net earnings were $14.2 million on sales of $646 million. This compares with $12.7 million in the fourth quarter a year ago. For the fourth quarter of 2001, cash flows from operations were $32 million compared with $38 million in the same period in 2000.
Stanley Rabin, CMC chairman, president and CEO said, "On an absolute basis, fiscal 2001 was a disappointing year and well below our plan; on a relative basis, we outperformed virtually all of our competitors in our various industry sectors.
“The principal problem, Rabin continues, “was the persistent global economic slowdown and unprecedented 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.
"Operating profit for our four steel mills was 27 percent below fiscal 2000, primarily because of an operating loss at the Alabama mill and lower profits in Texas and Arkansas, which could not be offset by a turnaround at the South Carolina mill. For the year, tons melted and rolled decreased 3 percent to 1.8 and 1.7 million tons, respectively, while shipments rose 3 percent to 1.9 million tons. The average annual mill selling price was $22 below last year, and the average selling price for finished goods plummeted $24 per ton to $290 per ton. Mill rebar prices remained weak while merchant bar and light structural prices were, simply put, atrocious.
Sharply reduced steel scrap prices were a significant offset in maintaining mill product margins, with the average annual scrap purchase cost down by $17 per ton. Utility costs, on the other hand, rose nearly $10 million compared with the previous year, although in the fourth quarter they decreased by $750,000 against the fourth quarter of fiscal 2000. The fourth quarter continued the significantly stronger second half results. Operating profit for the four steel mills was 21% higher than last year's fourth quarter on a 10% increase in tonnage shipped, but quarterly mill selling prices were down similar to the entire year. Scrap prices were slightly stronger than the third quarter, but still $10 per ton lower than one year ago."
"The Secondary Metals Processing Division was unprofitable compared with a profit the previous year," Rabin continued, "but showed a modest operating profit in the fourth quarter and second half. The combination of high imports of steel scrap, weak domestic steel mills and the strong U.S. dollar continued to dampen our ferrous scrap business. Nonferrous margins were impacted as well by the sharp drop in terminal market values.
“Total tons sold year-to-year were down 4 percent. Versus last year, the average ferrous price sank by $21 to $75 per ton and shipments fell 5 percent. The average nonferrous scrap price was approximately 5 percent lower than a year ago while nonferrous shipments were 2 percent higher. Total volume of scrap processed during fiscal 2001, including our CMC Steel Group operations, reached 2.3 million tons.
Rabin added, "Operating profit for our Marketing and Trading segment was less than half of last year's excellent result. Net sales declined by 15% to $771 million, in large part because of a big reduction in volume due to the depressed economies, oversupply in most markets and intense competition from domestic suppliers in the respective markets. Results for the fourth quarter mirrored the year. Additionally, prices softened further, extending the squeeze on gross margins in this segment and resulting in an abnormal incidence of claims. The influence of the strong U.S. dollar continued to hamper our results in various parts of the world.”