Steel Dynamics, Inc. announced record third
quarter earnings of $114 million. Net sales for the third quarter were a record $635 million, an increase of 21 percent from the second quarter of 2004 and 150 percent higher than the third quarter of 2003. Net income for the first nine months of 2004 was $213 million, a seven-fold increase over 2003. This year's third quarter earnings exceeded the company's earnings for the first half of the year, and were greater than any prior year.
"Not only did the third quarter set company records for both sales and earnings," said Keith Busse, president and CEO of Steel Dynamics, "but several of our operations set monthly and quarterly records for both production and shipments. As expected, the combination of greater shipping volumes, higher steel selling prices, and continued effective cost control produced profit margins for the third quarter that were well above historical levels. Our steel-making operations achieved a record quarterly operating profit of $216 per ton shipped.
"Although SDI's extraordinary third-quarter results arose in part from strong market conditions, we believe structural changes in the domestic steel industry as well as SDI's stronger competitive position have set the stage for sustainable profits at higher levels than we have achieved in the past. Some of the initiatives that have strengthened our market position include a growing volume of shipments made possible by recently added production capacity, an increasing diversity of steel-product offerings that serve new markets, and an improving mix of products with an emphasis on more value- added, finished steels," Busse said.
Third quarter consolidated shipments of 898,000 tons were 21 percent higher than the third quarter of 2003. Year-to-date consolidated shipments of 2.6 million tons were 26 percent higher than the first nine months of 2003.
In the third quarter, SDI's consolidated average selling price was $706 per ton, which was $115 per ton higher than the second quarter of 2004. Third quarter scrap costs per net ton charged were $250, approximately $23 per ton higher than the second quarter of 2004 and approximately $122 per ton higher than third quarter of 2003.
“We see steel pricing in the fourth quarter softening somewhat, with scrap prices remaining high by historical standards, yet we nevertheless expect strong fourth quarter results. SDI's 2004 net sales are expected to exceed $2 billion, more than double 2003 net sales. We believe fourth-quarter earnings will be in the range of $1.55 to $1.75 per diluted share, slightly higher than our earlier estimate. It should be noted that we will be replacing some of last year's year-end supply agreements with agreements containing more favorable terms that should result in increased profitability related to these shipments.