Economy
SDI Foresees Lower Q1 Earnings on Sinton, Pig Iron Woes
March 15, 2023
Steel Dynamics Inc. (SDI) expects lower first-quarter 2023 earnings on costs related to its Sinton, Texas, flat-roll mill and the continued work-through of higher-priced pig iron purchased in 2022.
The Fort Wayne, Ind.-based steelmaker expects Q1 earnings in the range of $3.47 to $3.51 per diluted share. This is down from $3.61 per diluted share reported in Q4 2022, and off significantly from $5.71 per diluted share in Q1 of last year.
The company said, excluding the Sinton growth investment of an estimated $78 million, adjusted Q1 earnings would be expected in the range of $3.78 to $3.82 per diluted share.
Also, as SDI previously discussed, Q1 steel earnings are seen taking a hit of an estimated $64 million, or $0.26 per diluted share, as the company continues to use pig iron bought during the early stages of Russia’s invasion of Ukraine last year.
SDI said Q1 2023 profitability from steel operations is expected to be stronger than Q4 results based on increased shipments more than offsetting metal spread compression.
“Steel pricing has since strengthened in the first quarter, and steel producer lead times have extended as steel demand is strong,” SDI said in its Q1 guidance release. “The automotive, non-residential construction, energy, and industrial sectors continue to lead demand.”
For its metals recycling operations, the company expects higher earnings in Q1 vs. the previous quarter on stronger metal margin and volumes for both ferrous and nonferrous products.
In its steel fabrication operations, though, SDI expects lower earnings this quarter compared with Q4 2022 on lower shipments due primarily to supply-chain constraints.
Looking further ahead, SDI said the continued onshoring of manufacturing, coupled with the US infrastructure programs and industrial build-outs, “supports strong demand in the coming years.”
By Ethan Bernard, ethan@steelmarketupdate.com
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