December 02, 2008
SDI reports record sales and earnings for Q1
Steel Dynamics, Inc announced Q1 2008 net income of USD 143 million reflecting the company’s recent two for one stock split. Net income increased 40% and net sales more than doubled to USD 1.9 billion, compared to the first quarter of 2007. Comparing first quarter 2008 results to the fourth quarter of 2007, net income grew by 46% and net sales increased by 31%.
SDI said that its first quarter 2008 results benefit from the company’s acquisitions of The Techs and OmniSource Corporation. A major factor positively impacting the quarter results is a significant improvement in steel operations results. First quarter steel shipments of 1.6 million tons reflect increased sequential shipping volumes by all six steelmaking operations. Flat rolled steel shipments from the Flat Roll Division and The Techs were particularly strong, together totaling 947,000 tonnes, an increase of 109,000 tonnes. Shipments by the four long-products steel mills increased by 7% sequentially.
Another significant impact on the quarter’s increased net sales and earnings is OmniSource Corporation. OmniSource was accretive to first quarter earnings by approximately USD 0.09 per diluted share. During the quarter, OmniSource experienced very strong demand for recycled ferrous scrap, both from the Steel Dynamics mills and from other mini mills, integrated steel mills, and foundries. Its favorable inventory posture entering the quarter put OmniSource in a position to capitalize on high scrap demand during the first quarter.
Mr Keith Busse chairman & CEO of SDI said that “SDI’s first quarter results exceeded our March 11 earnings guidance of USD 0.625 to USD 0.65 per diluted share, primarily due to the continued strengthening in the quarter of the flat roll steel market and the metals recycling business. Prices for both flat-rolled steel and scrap climbed faster and higher than we had anticipated, accelerating the margin growth we had predicted for the second quarter. Current market conditions suggest that resource cost increases can be offset by surcharges and selling price adjustments resulting in growing margins.
He added that “Our outlook for 2008 continues to be very positive. Even with weakness in the US economy, we continue to see strong demand for flat-rolled steels, due principally to constrained domestic supply, low steel inventories, and limited steel imports. Second quarter backlogs for structural steel, merchant bars, and SBQ remain strong due to relatively steady demand as well as limited import activity. Likewise, we expect our metals recycling business to continue to perform well during this period of high demand for ferrous and non ferrous recycled resources and pricing above historical levels. As long as global steel demand remains high and global steel prices meet or exceed US prices, we should expect that steel imports into the US will remain at a low level especially in light of a weak dollar. The path that resource costs and product pricing will take in the second half of the year is uncertain although we believe that second quarter as well as third quarter domestic market conditions will remain favorable, allowing us to adequately recover any increase in costs. As a result, our preliminary earnings estimate for the second quarter of 2008 is in a range of USD 0.80 to USD 0.90 per diluted share.”
