Steel Dynamics Reports for Quarter

Steel Dynamics, Inc. announced second quarter earnings of $51 million, versus $67 million in the second quarter of 2004 and $61 million in this year's first quarter. Net sales for the quarter were $546 million, an increase of 4 percent from the second quarter of 2004, but 4 percent lower than the first quarter of 2005.

"Demand for flat-rolled steel in the second quarter was much weaker than initially expected, particularly toward the end of the quarter," said Keith Busse, president and CEO of Steel Dynamics. "This resulted in lower selling prices and a decrease in the spread between selling prices and the cost of the ferrous scrap consumed during the quarter. Our average consolidated selling price per ton shipped decreased $61 per ton, from $669 in the first quarter to $608 in the second quarter, while our metallics costs were down $49 per ton. Although falling scrap prices in the second quarter are a positive for future quarters, our raw materials costs in the second quarter reflected the somewhat higher prices of materials purchased earlier.

"While the company and the industry experienced reduced order entry rates in the second quarter, Steel Dynamics performed very well operationally and continues to operate at historically high levels of profitability. In May the Flat Roll Division achieved a hot band production record, while yet in June, due to market conditions, production was off by 15 percent versus our early expectations. Additionally, the Structural & Rail Division set a new record for structural steel shipments in June, and its quarterly shipments, for the first time, exceeded 200,000 tons. The Bar Products Division continues to expand its offerings of SBQ products and achieved a 20 percent increase in shipments compared to the first quarter," Busse said.

Second quarter consolidated shipments of 897,000 tons were 1 percent higher than the second quarter of 2004 and 5 percent higher than the first quarter of 2005. Steel operations shipments were virtually unchanged compared to the second quarter of 2004, but were up 4 percent over the first quarter. Flat Roll shipping volume in the second quarter was unchanged from the first quarter, but shipments of structural steel and SBQ bars increased.

"The flat roll market remains soft in comparison to 2004, although we are encouraged by recent order-entry volume and are hopeful this trend will continue," Busse said. "Our structural steel backlog is at a record level, as we believe that the non-residential construction market is improving. Our SBQ bar backlog is weak in comparison to 2004, but with the new contract season just ahead, SDI is well positioned with a broad array of new products to gain new business."