Nucor reports slimmer Q4 profits

Charlotte, North Carolina-based Nucor Corp. has announced consolidated net earnings of nearly $108 million in the fourth quarter of 2019 and an annual net earnings figure of $1.27 billion. That compares with net earnings of $275 million in the fourth quarter of 2018 and what was a record $2.36 billion in net earnings for all of 2018.

Despite the slimmer profits compared to 2018, Leon Topalian, Nucor’s president and CEO, describes the numbers as “higher actual fourth quarter earnings than we indicated in our mid-December quantitative guidance.” The CEO points to “stronger than expected steel mill segment performance in December [as] the primary driver” for the final results.

“We believe that the inventory destocking that occurred throughout most of 2019 concluded in the fourth quarter, when customers resumed more normal buying patterns,” adds Topalian in remarks accompanying the results.

The scrap-fed electric arc furnace (EAF) steelmaker says it paid less for ferrous scrap infeed on average in both the fourth quarter and all of 2019 compared with 2018.

“The average scrap and scrap substitute cost per gross ton used in the fourth quarter of 2019 was $275, an 8 percent decrease compared to $299 in the third quarter of 2019 and a decrease of 23 percent compared to $359 in the fourth quarter of 2018,” the steelmaker writes in notes accompanying its results. “The average scrap and scrap substitute cost per gross ton used for the full year 2019 was $314, a decrease of 13 percent from $361 for the full year 2018.”

Positive factors Topalian cites include “general business conditions [that] improved in the fourth quarter due to a number of factors, including a rate cut by the Federal Reserve, the new labor agreement between the United Automobile Workers and GM, and definitive progress on the trade front.” In looking ahead to 2020, Topalian comments, “We are encouraged by recent economic trends and confident that our positive momentum will continue in 2020.”

The company does not mention its David J. Joseph Co. scrap recycling subsidiary in remarks about its raw materials operations, noting instead that losses in the division “significantly increased in the fourth quarter of 2019” because of the “impact of our Louisiana DRI (direct reduced iron) plant’s planned outage, which was completed in mid-November.”

Nucor also took a write-off or impairment charge “related to one of our fields of proved producing natural gas well assets,” and points to “further margin compression throughout our raw materials businesses” as a factor in the fourth quarter.

The steelmaker says its sees “an improvement in pricing for raw materials” ahead for 2020.