Nucor earnings drop in Q2

Charlotte, North Carolina-based electric arc furnace (EAF) steelmaker Nucor Corp. has reported second-quarter 2024 results that show a 53.8 percent drop in earnings per share compared with the second quarter of last year.

The company, which also operates the David J. Joseph (DJJ) network of metals recycling facilities, reports net earnings of $645.2 million from April through June, representing a 23.6 percent drop from the $844.8 million earned in the prior quarter and a 55.8 percent decline compared with the $1.46 billion earned in the second quarter of 2023.

“While market conditions have softened compared to recent record-setting years, Nucor remains focused on its long-term growth strategy and has returned more than $1.7 billion to investors through June,” Nucor President and CEO Leon Topalian says.

Throughout this decade, Nucor has been acquiring downstream steel products and fabricating companies. Although its earnings are down, Topalian says that strategy is succeeding.

“Nucor’s strategy to grow our core steelmaking operations and expand into steel-adjacent downstream markets positions the company to create attractive shareholder value and improve the company’s through-cycle earnings profile,” he says.

In the most recently completed quarter, Nucor's $8.08 billion in net sales represents a 1 percent decline from its top line in this year’s first quarter and a drop of 15 percent compared with $9.52 billion in net sales in the second quarter of 2023.

The quarter-on-quarter drop occurred because of the price of steel more so than the volume shipped, Nucor says.

The firm shipped just under 6.3 million tons of steel to outside customers in the second quarter of 2024, up by 1 percent compared with the prior quarter and down by only 2 percent compared with one year ago, when its top line revenue was much higher.

Regarding its margins this spring, Nucor writes, “The average scrap and scrap substitute cost per gross ton used in the second quarter of 2024 was $396, a 6 percent decrease compared to $421 in the first quarter of 2024 and a 13 percent decrease compared to $455 in the second quarter of 2023.

“The average scrap and scrap substitute cost per gross ton used in the first six months of 2024 was $409, a 6 percent decrease compared to $435 in the first six months of 2023.”

The low cost of ferrous scrap was offset by the low prices fetched for its finished steel, Nucor says.

“The largest driver of the decrease in earnings in the second quarter of 2024 as compared to the first quarter of 2024 was the decreased earnings of the steel mills segment, primarily due to lower average selling prices, and, to a lesser extent, decreased volumes," the company adds.

In a comment on its raw materials segment, which includes the DJJ scrap network, the company refers only to increased revenue in the second quarter of 2024 compared with the prior quarter due to the increased profitability of its direct reduced iron (DRI) facilities.

Looking ahead, Nucor does not see an income rebound likely in the current quarter’s balance sheet.

“We expect earnings in the third quarter of 2024 to decrease compared to the second quarter of 2024. The largest driver for the expected decrease [is] the expected decrease in earnings of the steel mills segment, primarily due to lower average selling prices,” the company says.