UPDATE 2-Nucor earnings rise but outlook tepid; shares fall

Thu Apr 24, 2014 11:40am EDT

(Adds analyst comment, market reaction)

By Allison Martell

April 24 (Reuters) - U.S. steelmaker Nucor Corp reported a rise in first-quarter profit on Thursday, but forecast only "some improvement" in the current quarter, when analysts had expected to see significant growth, and its shares fell.

Nucor's shares were down 2.0 percent at $51.47 on the New York Stock Exchange. Morgan Stanley analyst Evan Kurtz said in a note to clients that the company's lukewarn forecast for the second quarter could point to worse-than-expected earnings. He noted, however, that Nucor tends to give conservative guidance.

The company said it sees a stronger performance from its steel mills and construction products business in the second quarter, excluding the impact of unusual items, though imports will likely continue to pressure margins at its mills.

Analysts, on average, have forecast earnings of 65 cents a share for the second quarter. Nucor reported profit of 35 cents a share for the first quarter on Thursday.

Excluding charges related to inventory, tax changes and asset disposals, earnings would have been 44 cents a share. Analysts had expected earnings of 37 cents a share, according to Thomson Reuters I/B/E/S.

Tons shipped to outside customers rose 8 percent in the first quarter from a year earlier, and the average sales price was up 3 percent, but average scrap and scrap substitute costs rose 5 percent.

Excess capacity is weighing on steelmakers around the world, but economic recovery is expected to boost U.S. steel demand this year. The World Steel Association has forecast 4 percent growth in demand in the United States in 2014, versus a 0.6 percent contraction last year.

Charlotte, North Carolina-based Nucor said it plans to appeal an antitrust verdict brought against it by a jury in Houston in March that would award the plaintiff $52 million in damages. Under antitrust law the damages could be tripled, the company said, adding that it is not clear what portion, if any, it would be required to pay.

Nucor said it has not recorded a charge on earnings as a result of the verdict.

BY THE NUMBERS

First-quarter earnings rose to $110.0 million, or 35 cents a share, from $84.8 million, or 26 cents, a year earlier. Net sales rose 12 percent to $5.11 billion.

In March, Nucor cut its first-quarter earnings forecast to between 30 and 35 cents a share, saying bad weather had weighed on demand, reduced rail capacity and exacerbated seasonal weakness in its construction products business. (Reporting by Allison Martell in Toronto; Editing by Lisa Von Ahn; and Peter Galloway)

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