April 29, 2010 / 12:37 PM / in 8 years

UPDATE 2-Olympic Steel Q1 profit trails Street

* Q1 EPS $0.16 misses est of $0.18/shr

* Revenue rises 19 percent

* Tons sold up 29 pct

* Shares drop 4 percent (Recasts; adds details, analysts’ comments, share movement)

By Antonita Madonna Devotta

BANGALORE, April 29 (Reuters) - Olympic Steel Inc’s (ZEUS.O) first-quarter profit fell short of Wall Street estimates due to weaker-than-expected gross margins, but it forecast a sequential improvement in second-quarter results.

With global steel prices and shipments rising, Olympic, a service center, said it was gaining from the improving demand, especially from original equipment manufacturers.

“Our second quarter sales and earnings are expected to benefit from the continuing trend of rising steel prices and shipments experienced in each month of the first quarter,” the company said.

Given the current rising price environment, analyst Nat Kellogg of Hudson Securities said the company’s first-quarter gross profit could have been higher at about $180 a ton, compared with about $160 a ton that the company posted.

“I think that’s where the disappointment was, because the volumes were pretty good,” Kellogg said.

    The company said it saw shipments climb 29 percent in the first quarter, outpacing the market increase in total steel shipments of about 11 percent.

    “Average selling prices were in line with our expectations, while material costs per ton were slightly higher than anticipated,” analyst Mark Parr of KeyBanc Capital Markets said.

    The company posted first-quarter net income of $1.7 million, or 16 cents a share, compared with a loss of $25.5 million, or $2.34 a share, a year ago.

    Revenue for the quarter rose 19 percent to $167.9 million.

    Analysts, on average, expected earnings of 18 cents a share, before items, on revenue of $158.3 million, according to Thomson Reuters I/B/E/S.

    Shares of the Ohio-based company were trading down 2 percent at $31.91 Thursday morning on Nasdaq. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Anne Pallivathuckal)

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