Average sales price per ton in the third quarter of 2019 decreased 5 percent compared with the second quarter of 2019.
Charlotte, North Carolina-based electric arc furnace (EAF) steelmaker Nucor Corp. has announced consolidated net earnings of $275 million, or 90 cents per diluted share, for the third quarter of 2019. The company reported consolidated net earnings of $386.5 million, or $1.26 per diluted share, for the second quarter of the same year and $676.7 million, or $2.13 per diluted share, for the third quarter of 2018. Third-quarter 2018 earnings include a noncash impairment charge of $110 million, or 26 cents per diluted share, related to its natural gas well assets, as well as a benefit of $24.8 million, or 6 cents per diluted share, related to insurance recoveries, the company notes.
Nucor reported consolidated net earnings of $1.16 billion, or $3.78 per diluted share, through the first nine months of 2019 compared with consolidated net earnings of $1.71 billion, or $5.35 per diluted share, in the first nine months of 2018.
"After a brief summer rally, plate and sheet market conditions softened in the third quarter,” says John Ferriola, Nucor chairman and CEO. “Excess inventory throughout the supply chain has resulted in continued destocking by our customers. However, spending in the nonresidential construction market remained at healthy levels during the third quarter, and we delivered continued strong performance from our metal buildings, piling, joist and deck divisions; as well as improved performance in our rebar fabrication divisions," he adds.
He expresses confidence in the company’s business fundamentals and long-term strategy, adding, “Our strong cash-flow generation through the cycle underscores the benefits of our low and highly variable cost structure, as well as of our highly diversified business model. Looking to 2020 and beyond, Nucor is uniquely well-positioned to build on our competitive advantages and extend our long track record of shareholder value creation."
Nucor's consolidated net sales decreased 7 percent to $5.46 billion in the third quarter of 2019 compared with $5.90 billion in the second quarter of 2019. It also decreased 19 percent compared with $6.74 billion in the third quarter of 2018.
Average sales price per ton in the third quarter of 2019 decreased 5 percent compared with the second quarter of 2019. It decreased 13 percent compared with the third quarter of 2018.
A total of 656 million tons were shipped to outside customers in the third quarter of 2019, a 3 percent decrease from the second quarter of 2019 and a 7 percent decrease from the third quarter of 2018.
Total steel mill shipments in the third quarter of 2019 were similar to total steel mill shipments in the second quarter of 2019, while they decreased 8 percent from the third quarter of 2018. Steel mill shipments to internal customers represented 21 percent of total steel mill shipments in the third quarter of 2019, which compares to 19 percent in the second quarter of 2019 and 20 percent in the third quarter of 2018. Downstream steel product shipments to outside customers in the third quarter of 2019 increased 5 percent from the second quarter of 2019 and were similar to downstream steel product shipments to outside customers in the third quarter of 2018.
In the first nine months of 2019, Nucor's consolidated net sales decreased 7 percent to $17.46 billion compared with $18.77 billion in the first nine months of 2018. Total tons shipped to outside customers in the first nine months of 2019 were 20.05 million tons, a decrease of 5 percent from the first nine months of 2018, while the average sales price per ton decreased 2% percent.
The average scrap and scrap substitute cost per ton used in the third quarter of 2019 was $299, a 9 percent decrease compared with $330 in the second quarter of 2019 and a decrease of 20 percent compared to $374 in the third quarter of 2018. The average scrap and scrap substitute cost per ton used in the first nine months of 2019 was $328, a decrease of 9 percent from $361 in the first nine months of 2018.
Preoperating and startup costs related to the Nucor’s growth projects were approximately $28 million, or 7 cents per diluted share, in the third quarter of 2019 compared with approximately $21 million, or $0.05 per diluted share, in the second quarter of 2019 and approximately $11 million, or 3 cents per diluted share, in the third quarter of 2018.
In the first nine months of 2019, preoperating and startup costs related to Nucor’s growth projects were approximately $68 million, or 17 cents per diluted shar, compared with approximately $19 million, or 5 centa per diluted share, in the first nine months of 2018.
Overall operating rates at Nucor’s steel mills decreased to 83 percent in the third quarter of 2019 as compared to 84 percent in the second quarter of 2019 and 92 percent in the third quarter of 2018. Operating rates for the first nine months of 2019 decreased to 85 percent as compared to 93% percent for the first nine months of 2018.
Nucor says its liquidity position remains strong with $1.94 billion in cash and cash equivalents and short-term investments as of Sept. 28 and an untapped $1.5 billion revolving credit facility that does not expire until April 2023.
In September 2019, Nucor's board of directors declared a cash dividend of 40 cents per share payable Nov. 8 to stockholders of record as of Sept. 27. This dividend is Nucor's 186th consecutive quarterly cash dividend, a record the company expects to continue.
As expected, the performance of the steel mills segment in the third quarter of 2019 decreased compared with that of the second quarter of 2019. Plate and sheet market conditions softened in the third quarter, and excess inventory throughout the supply chain has resulted in continued destocking by our customers.
The profitability of the steel products segment in the third quarter of 2019 improved as compared with the second quarter of 2019 as nonresidential construction market conditions remained strong. In addition, efficiency initiatives implemented at our rebar fabrication and metal buildings operations are enhancing the performance of those businesses.
The operating performance of the raw materials segment in the third quarter of 2019 decreased as compared with the second quarter of 2019 because of further margin compression in Nucor’s direct reduced iron (DRI) businesses. In early September, our DRI facility in Louisiana began a planned outage that is expected to last until mid-November.
Nucor's earnings in the fourth quarter of 2019 are expected to decrease as compared to the third quarter of 2019. The company says it expects earnings in the steel mills segment to further decrease in the fourth quarter of 2019, as lower steel prices at the end of the third quarter, which we believe have bottomed, impact our fourth-quarter results. The profitability of the steel products segment in the fourth quarter of 2019 is expected to decrease slightly from the third quarter of 2019 because of normal year-end seasonality, Nucor says.
The performance of the raw materials segment is expected to decline in the fourth quarter of 2019 compared with the third quarter of 2019 because of the impact of our Louisiana DRI plant's planned outage continuing until mid-November – as well as expected further margin pressure throughout our raw materials businesses.