Nucor sees operating profits staying steady

Charlotte, North Carolina-based electric arc furnace (EAF) steelmaker Nucor Corp. says it expects its first-quarter 2023 earnings to be in a lower range compared with the prior quarter and the first quarter of 2022.

In issued guidance, Nucor is predicting earnings per diluted share of from $3.70 to $3.80 for the current quarter. The company reported net earnings of $4.89 per diluted share in the fourth quarter of 2022 and $7.67 per diluted share in the first quarter of 2022.

The company says its fourth-quarter 2022 earnings included a 24 cents per share figure for a state tax credit and another 34 cents per share boost from a “change in a valuation allowance of a state deferred tax asset.”

Nucor adds, “The profitability of the steel mills segment is expected to increase in the first quarter of 2023 as compared to the fourth quarter of 2022 due to higher margins and volumes, with the largest improvement expected to occur at our sheet mills.”

In the raw materials segment, which includes Cincinnati-based scrap processing firm David J. Joseph Co., Nucor says, “We expect increased profitability compared to the fourth quarter of 2022 due to higher volumes at our DRI facilities and scrap recycling and brokerage operations.”

The company also says it expects “continued strong profitability in the first quarter of 2023” in its steel products segment. However, it does offer a cautionary note, writing, “Some decrease [is] expected from the fourth quarter of 2022 due to slower construction activity and some reductions in realized pricing. Overall, we expect first-quarter 2023 steel products segment earnings to be higher than the first quarter of 2022.”

Nucor concludes, “On a combined basis, the operating income during the first quarter of 2023 from our three business segments is expected to exceed that of the fourth quarter of 2022. However, we expect consolidated net earnings to decrease compared to the fourth quarter of 2022 due to less favorable intercompany eliminations in the first quarter of 2023 and the absence of state tax benefits that were recorded in the fourth quarter of 2022.”

Earlier this week, Indiana-based EAF producer Steel Dynamics Inc. (SDI) issued first-quarter 2023 guidance that likewise predicted narrower overall profits. SDI cited startup costs pertaining to the ramping up of its flat-roll mill in Sinton, Texas.