Nucor, SDI expect improved Q4 earnings

Two electric arc furnace (EAF) steelmakers have issued shareholder guidance for the fourth quarter that foresee a healhty improvement in their earnings compared to the prior quarter. Both companies have fiscal calendars that line up with the calendar year.

In its forecast for the fourth quarter, Charlotte, North Carolina-based Nucor Corp. says it expects iearnings to be in the range of $1.15 to $1.20 per diluted share. That compares with third quarter 2020 earnings that came in at 63 cents per diluted share and fourth quarter 2019 earnings that were just 35 cents per diluted share.

States the steelmaker, “Earnings in the fourth quarter of 2020 are improving compared to the third quarter of 2020 primarily due to higher pricing at our sheet and plate mills. Reflecting our product diversity, our steel mills segment also continues to benefit from strong results at our bar and structural mills.”

Fellow steelmaker Steel Dynamics Inc. (SDI), based in Fort Wayne, Indiana, has offered guidance forecasting fourth quarter 2020 “adjusted earnings to be in the range of 80 cents to 84 cents per diluted share.” That compares with third quarter 2020 earnings of 47 cents per diluted share and adjusted earnings of 51 cents per diluted share.

SDI cites the booming ferrous scrap market in its guidance news release, writing, “As domestic steel production further increased in the fourth quarter, ferrous scrap demand also strengthened. Fourth quarter earnings from the company’s metals recycling operations are also expected to be higher than sequential third quarter results, based on significantly higher metal margins as average quarterly ferrous scrap prices increased and volumes expanded.” SDI owns scrap processing and trading firm OmniSource Corp.

Despite rising scrap prices, Nucor, which owns the Cincinnati-based David J. Joseph Co., points to its direct reduced iron (DRI) operations as driving profits in its raw materials business unit. “The profitability of the raw materials segment is expected to increase in the fourth quarter [because of] improved financial performance of our DRI facilities that are benefitting from higher prices for raw materials,” says Nucor in its guidance press release.

Concludes the steelmaker, “The ongoing COVID-19 pandemic continues to cause uncertainty, making it difficult to forecast future market conditions and demand trends. However, the beneficial impact of recent price increases on our sheet mills' performance, as well as the strength of our backlogs and overall lead times, indicates that the current quarter’s momentum will continue into the first quarter of 2021.”