Steelmaker Nucor's profit down, sees further drop
(Reuters) - Nucor Inc (NUE.N) reported a drop in third-quarter earnings on Thursday because of lower prices for its steel and slowing economic growth, and said it expected a further profit decline in the current period.
But the third-quarter profit still exceeded Wall Street estimates, and Nucor's stock edged higher in morning trading.
"Their average prices were down," said Bradford Research analyst Charles Bradford. He noted, though, that the price of scrap, a key ingredient for Nucor's steel, was also down, "and that reflects lower costs."
Net earnings were $110.3 million, or 35 cents per share, compared with $181.5 million, or 57 cents per share, a year earlier, the Charlotte, North Carolina-based steelmaker said.
Excluding charges for inventory accounting and a loss on sale of some assets, the profit was 45 cents per share, which beat the analysts' average estimate of 43 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 9 percent to $4.8 billion. Nucor said its average steel price had declined 8 percent, and shipments had dipped slightly to 5.77 million tons.
"We currently expect to see some further reduction in earnings exclusive of one-time charges for the fourth quarter," the company said in a statement.
Nucor said earnings had suffered because of increasing imports of cheap foreign steel into the United States, as well as excess domestic sheet supply.
In addition, it cited volatility in scrap prices and political and economic uncertainty in global markets that was affecting steel buyers' confidence.
"Slowing economic growth both domestically and globally is expected to be a negative factor through the end of the year," the company said.
Nucor said its strongest markets continued to be manufactured goods, including automotive, energy and heavy equipment, while the construction market remained "very challenging."
The third-quarter results include noncash inventory-related charges of about $28.2 million, or 6 cents per share, for the acquisition of Skyline Steel LLC and a loss of $17.6 million, or 4 cents per share, on the sale of the assets of Nucor Wire Products Pennsylvania Inc.
Shares of Nucor were up 0.3 percent at $40.52 on the New York Stock Exchange.
(Reporting by Steve James in New York; Editing by Lisa Von Ahn)