Steelmaker Nucor posts loss, sees slow improvement

NEW YORK (Reuters) - Steelmaker Nucor Corp (NUE.N) posted a fourth-quarter loss on Thursday and said it was seeing only slow improvement in steel demand and its shares dropped over 2 percent.

But the company said it expected to return to profitability in the first quarter because of high prices for all steel mill products.

"This positive trend in earnings is expected to continue as we head into the second quarter. We are therefore cautiously optimistic regarding first half volume, pricing and profitability," the company said in a statement.

Chairman and Chief Executive Officer Dan DiMicco told analysts during a conference call to discuss the results, "We do believe we have reached the bottom and are seeing some positive demand signs, but they're not rapid and they're not large."

DiMicco said Nucor's most challenging market was residential and non-residential construction, which has been stagnant for two years.

"There is really nothing going on out there that's going to change things in dramatic fashion in the first quarter. We do expect to see steady improvement throughout the year, and we do expect to see the ability to maintain strong pricing to cover our raw material costs throughout the year."

Nucor is a so-called mini-mill, using scrap metal as a raw material, as opposed to traditional steelmakers that use iron ore and coking coal. The company said the average scrap and scrap substitute cost per ton used in the fourth quarter rose 30 percent to $359.

DiMicco noted a tremendous run up in scrap prices over the past year, but he forecast a more stable environment for scrap pricing through the second quarter.

"At the end of the day you know how well the economy is doing, and if we don't see growth north of 3 percent, then things are going to grow slowly for steel consumption whether it is in manufactured goods or it is in construction products," he said.

Nucor, based in Charlotte, North Carolina, said its net fourth-quarter loss was $11.4 million, or 4 cents per share, compared with a year-earlier net profit of $58.9 million, or 18 cents per share.

Excluding a 2 cent per share charge for closure of a joint venture in Australia, the 2 cents per share loss compared with analysts' average estimate of a loss of 10 cents per share, according to Thomson Reuters I/B/E/S.

Nucor said net sales in the quarter were $3.85 billion, a 31 percent increase from the 2009 quarter. The average sales price per ton increased 14 percent from the year-ago quarter, while total tons shipped to outside customers were 5.334 million, an increase of 15 percent over last year's fourth quarter.

It said mill utilization rates, which improved throughout the fourth quarter, have continued to improve in January, and it expects the trend to continue through the first quarter.

Nucor shares closed down 2.36 percent at $45.40 on the New York Stock Exchange.

(Reporting by Steve James; Editing by Derek Caney)