Steel Mills
Olympic Steel Sales, Earnings Decline in Q3
Written by Sandy Williams
November 9, 2019
Olympic Steel reported third-quarter net sales of $384 million, a 16 percent decline from third-quarter 2018 due to lower shipping volumes and pricing in the carbon flat segment. Net income was $591,000 for the quarter, down from $11.6 million in Q3 2018.
“Softer global demand, unsettled trade agreements, excess global steel capacity and overall market uncertainty resulted in sharp declines in carbon steel pricing and slowing customer demand,” said Olympic CEO Richard Marabito.
Selling prices decreased by 7 percent in the third quarter versus the same period a year ago, while volume was down 10 percent, the company reported. “While we anticipated the third quarter would be softer than the first half of the year, we are encouraged by the positive impact we are seeing from our strategy to diversify the business,” Marabito added.
Olympic’s Specialty Metals and Pipe and Tube segments continued to show resilience and achieved a profitable third quarter. Pipe and Tube sales were down approximately 2 percent year-over-year, while the market was down 14 percent.
Third-quarter sales included 248,521 tons of carbon flat products and 38,213 tons of specialty metals flat products. Average selling price for carbon flat products was $867 per ton.
Commenting on recent steel price increases, President Dave Wolfort said, “So, we saw the second [mill] price increase yesterday. There is traction. As we all know, it’s a cyclical business. Great to be on top on the high end of the cycles and not so good to be on the bottom end of the cycles. So, what we’ve seen is a lowering of inventory levels. And in anticipation of this being close to the bottom of the marketplace, there was a huge surge in ordering to the mills, lead times went out, prices went up. I think we can clearly see that we are in a recovery phase and that should extend into early 2020.”
Olympic is looking forward to a typical fourth quarter with normal seasonality. Shipments are expected to decrease 7-8 percent. Margins are expected to see some recovery, specifically on the spot side, said Marabito.
Sandy Williams
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