Nucor Beats Despite Decline in Year's Profits

Jan.27.10 | About: Nucor Corporation (NUE)

Nucor Corporation (NUE) has revealed a profit of $58.9 million or 18 cents per share in the fourth quarter of 2009, compared to the Zacks Consensus Estimate of 9 cents per share. This was an improvement over losses of 60 cents, 43 cents and 10 cents per share in the first, second and third quarters of 2009, respectively.

However, the net income is lower than $105.9 million or 34 cents per share for the fourth quarter of 2008 due to reduced earnings in the company’s downstream, long products and scrap businesses, partially offset by the absence of high-cost pig iron inventories.

For the full year 2009, Nucor has posted a loss of $293.6 million or 94 cents per share, in sharp contrast to a profit of $1.83 billion or $5.98 per share for 2008. However, the loss is better than the Zack Consensus Estimate of a loss of $1.03 per share.

Net sales declined 6% to $2.94 billion in the quarter. Average sales price per ton fell 35% compared to the year-ago level. Total tons shipped to outside customers were 4.64 million tons, an increase of 8% over last year's quarter.

In 2009, net sales plummeted 53% to $11.19 billion. Average sales price per ton decreased 32% while total tons shipped to outside customers decreased 30% from 2008.

Overall steel mill utilization increased to 58% in the fourth quarter of 2009 from 48% in last year's fourth quarter. Steel mill utilization rates decreased from 80% in 2008 to 54% in 2009.

Total energy costs decreased about $5 per ton in the quarter from the same quarter of 2008. In 2009, total energy costs increased approximately $1 per ton in 2009 compared to 2008.

Supported by a strong $2.24 billion in cash and cash equivalents and short-term investments, as well as an untapped $1.3 billion revolving credit facility that matures in November 2012, Nucor's board of directors increased the cash dividend by 2.9% to 36 cents per share. The dividend is payable on February 11, 2010 to stockholders of record on December 31, 2009.

Despite the improved sequential results, the market seems to be focusing on Nucor’s year-over-year performance. This has led the company’s stock price to decline to $43.81 today from $44.13 after the market closed on Monday.