(Reuters) - Nucor Corp handily beat fourth-quarter profit estimates, boosted by hefty tariffs on imported steel, and the company forecast first-quarter 2019 earnings to be stronger despite a fall in sheet prices and margins.
Shares of the No.1 U.S. steel producer rose about 3 percent to $60.1 in morning trading on Tuesday, adding to the 14 percent gain so far this year.
Nucor’s profit jumped 68 percent in the fourth quarter as robust economic growth and the 25-percent tariff imposed in March last year boosted shipments compared to a year ago, besides pushing its steel prices 21 percent higher.
Nucor, which makes and distributes steel sheet, beam blank and bar steel for a wide range of industries, said it expects a fall in sheet prices as well as margins, which is expected to partially offset profitability in its bar and structural mill units.
Sheet mills account for nearly 44 percent of the U.S. steel maker’s total shipments, while bar mills constitute another 34 percent.
“The best way to sum up 2018 is this - it was a record year for Nucor. We posted record earnings per share and record revenue, and we shipped a record amount of steel,” Chief Executive Officer John Ferriola said.
The Trump administration clamped tariffs on imports of steel and aluminum on March 23, and exemptions given to Canada, Mexico and the European Union producers were removed in June, which is immensely helping U.S. producers.
Future contracts for U.S. hot-rolled coil steel have increased 5 percent to about $714 per ton over the last 12 months, and the prices peaked to as high as $920 at the beginning of July, according to data from Refinitiv Eikon.
Nucor posted earnings per share of $2.07 in the quarter, beating analysts estimate of $1.94 per share, according to IBES data from Refinitiv.
The steelmaker’s net earnings in the same quarter a year ago included a gain of $175.2 million due to the impacts of U.S. federal tax legislation.
Revenue rose to $6.29 billion from $5.09 billion.
Reporting by Rachit Vats in Bengaluru; Editing by James Emmanuel
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