Futures
Nucor Sees Drop in Q4 Mill Profits, Warns of 'Recession Concerns'
December 15, 2022
Nucor Corp. said it expects lower earnings in its steel mills segment in the fourth quarter ending Dec. 31 vs. the previous quarter.
Reasons cited include lower average selling prices, margin compression and lower volumes, with the largest decrease in profitability expected at its sheet mills.
The Charlotte, N.C.-based steelmaker said it expects overall fourth-quarter earnings to be in the range of $4.25 to $4.35 per diluted share.
Nucor reported net earnings of $6.50 per diluted share in the third quarter of 2022, and $7.97 per diluted share in the fourth quarter of 2021.
The company said full-year earnings for 2022 remain on track to exceed the record of $23.16 per diluted share Nucor set in 2021.
In a research note regarding fourth-quarter guidance, Wolfe Research managing director Timna Tanners said, “We think share value and consensus need to adjust for lower earnings ahead.”
Included in Nucor’s expected fourth-quarter earnings range is an approximately $58-million net benefit, or $0.22 per diluted share, related to state tax credits, the company said.
Shipments from its bar mills are expected to be lower due to seasonal factors with customers reducing inventories as year-end approaches, Nucor said.
Earnings in the steel products segment are expected to decline moderately in the fourth quarter compared to the previous quarter on lower volumes and selling prices, the company said.
“While we believe these trends are mainly seasonal effects, economic uncertainty and recession concerns could impact future demand,” Nucor said in a statement.
The raw materials segment is expected to have significantly lower quarter-over-quarter earnings due to decreased profitability of Nucor’s direct-reduced iron (DRI) facilities, both of which experienced planned outages during the fourth quarter, and decreased selling prices for raw materials, the company said.
During the fourth quarter, Nucor said it has repurchased approximately 3.1 million shares at an average price of $130.30 per share (approximately 20.6 million shares year to date at an average price of $134.29 per share).
Additionally, Nucor said it has returned approximately $3.3 billion to stockholders in the form of share repurchases and dividend payments year to date.
By Ethan Bernard, Ethan@SteelMarketUpdate.com
Latest in Futures
Nearby HR futures pull back as 2024 nears end
After experiencing a rally ahead of the 2024 election, the nearby part of CME HRC futures complex has softened as we approach year-end. Meanwhile, the forward positions (second half of 2025) have remained supported and largely unchanged.
HRC Futures: Here comes Trump bump 2.0?
No more excuses! The election is over. Donald Trump will be inaugurated on Monday January 20 with the Republican party in control of Congress. Now, it is time to get back to work!
HR Futures: Which way following election?
Since June, The US hot-rolled coil (HRC) futures market has been in a rare period of prolonged price stability, closely mirroring the subdued volatility seen in the physical market. Over the past five months, futures have been rangebound, with prices oscillating between a floor near $680 and a ceiling around $800. This tight range, highlighted in the chart, underscores a cautious market environment. The chart below shows the rolling 3rd month CME HRC Future.
HR futures: Support fails as market slows ahead of election
After a relatively stable and boring September, CME hot-rolled coil (HRC) futures have been on the move lower thus far in October. Since Sept. 30, the November and December futures have declined $63 and $65, respectively, with the curve’s contango steepening.
CRU: Open interest in December HR futures contract surges
CRU Principal Analyst Josh Spoores shares insight into the hot-rolled coil futures market.