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Steel Dynamics Reports Fourth Quarter and Annual 2019 Results

Steel News - Published on Fri, 24 Jan 2020

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Steel Dynamics Inc announced fourth quarter and annual 2019 financial results. The company reported fourth quarter 2019 net sales of USD 2.4 billion and net income of USD 121 million. Comparatively, prior year fourth quarter net sales were USD 2.9 billion, with net income of USD 270 million. Lower earnings resulted from two planned annual maintenance outages at the company's Butler and Columbus flat roll divisions, causing higher than normal maintenance and associated costs of approximately USD 15 million. The outages also reduced flat roll steel shipments by an estimated 70,000 tons to 80,000 tons, further reducing fourth quarter earnings.

Annual 2019 net income was USD 671 million representing the company's third-best annual performance, with net sales of USD 10.5 billion, as compared to record 2018 net income of USD 1.3 billion, with net sales of USD 11.8 billon. The decline in earnings was driven by lower average flat roll steel selling values, as average 2019 annual prime hot roll coil price indices decreased approximately USD 229 per ton, or 28 percent when compared to 2018, resulting in significant metal margin compression. Compared to 2018, the average 2019 external product selling price for the company's overall steel operations decreased USD 83 to USD 839 per ton. The average 2019 ferrous scrap cost per ton melted at the company's steel mills decreased USD 48 to USD 293 per ton.

Outlook – CEO Mr Millett said "Based on domestic steel demand fundamentals, we are constructive regarding North American steel market dynamics. We believe North American steel consumption will experience modest growth and will be supported by further steel import reductions and the end of steel inventory destocking. We believe recent and possible trade actions could have a positive impact in further reducing unfairly traded steel imports into the United States, including coated flat roll steel, which could have a significant positive impact for Steel Dynamics, as we are the largest non-automotive flat roll steel coater in the United States. In combination with our existing and newly announced expansion initiatives, there are firm drivers in place for our continued growth. We are excited about our Sinton, Texas flat roll steel mill project, and the associated long-term value creation it will bring through geographic and value-added product diversification. This facility is designed to have product size and quality capabilities beyond that of existing electric-arc-furnace flat roll steel producers, competing even more effectively with the integrated steel model and foreign competition. We have targeted regional markets that represent over 27 million tons of relevant flat roll steel consumption, which includes the growing Mexican flat roll steel market. This facility is located and designed to have a meaningful competitive advantage in those regions. The team began site work in the second half of 2019, and we are excited to announce that we recently received the required environmental permitting to allow for full construction efforts to begin, with current plans to commence operations mid-year 2021.”

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Posted By : Rabi Wangkhem on Fri, 24 Jan 2020
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