Steel Dynamics, Inc. announced net sales of $2.1 billion for 2004, more than double 2003 net sales of $987 million. Net income was $295 million, compared to 2003 net income of $47 million, an increase of 479 percent. For the fourth quarter net income was $82 million, compared to $17 million in the fourth quarter of 2003. Net Sales were $600 million for the quarter, an increase of 115 percent over the fourth quarter of 2003.
In 2004 the company's operating income was $148 per ton shipped with an operating margin of 24 percent.
Consolidated shipments for 2004 grew 22 percent to 3.4 million tons. Consolidated shipments in the fourth quarter were up 10 percent to 846,000 tons compared to 772,000 tons in the fourth quarter of 2003. Compared to the third quarter of 2004, consolidated shipments were 6 percent lower. The average consolidated selling price per ton in the fourth quarter increased to $710 from $706 in the third quarter, and was up 96 percent over the fourth quarter of 2003.
The cost of steel scrap per net ton charged increased $40 from the third quarter to the fourth quarter. Natural gas and electrical energy costs also increased in the quarter. These costs were higher than expected and resulted in lower margins compared to the third quarter of 2004. Fourth quarter results were also affected by a special performance bonus that was awarded to all employees and corporate charitable contributions of $1.5 million, which reduced the quarter's diluted EPS by about $0.05 per common share. Overall, the fourth quarter was the company's second strongest quarter to date, second only to 2004's third quarter.
"2004 was an extraordinary year for Steel Dynamics," said Keith Busse, president and CEO. "Strong steel markets led to historically high selling prices and margins despite substantially increased raw materials costs. In spite of dramatically escalating raw material costs the company was able to maintain strong profit margins through the implementation of raw material surcharges, which allowed us to recover most of our raw material cost increases. Our results were also enhanced by the contributions of our new production facilities that were acquired or built, and started up in late 2003 and early 2004, thereby expanding our steel product portfolio and increasing our volume of steel shipments.
"As we look ahead to 2005, we are optimistic about the sustainability of favorable domestic steel market conditions. Our existing steel manufacturing capacity will permit us to increase shipments by an additional 10 percent in 2005, allowing us to take advantage of the anticipated favorable market climate. While our visibility into the year is limited, our current outlook is for a strong first half. Late in the first quarter we are likely to enjoy lower costs as the price of steel scrap declined in December, January and February, and we currently expect selling values to improve slightly late in the first quarter or early second quarter. While we note some recent reports suggesting the adverse effects of Chinese steel exports on U.S. steel producers, we are equally mindful of those that disagree with this assessment, and on balance, we believe that this has created unwarranted anxiety about 2005. We feel that there is a high likelihood that U.S. producers will continue to benefit this year from strong global and domestic steel demand.