Nucor Reports Results for Second Quarter and First Half of 2017
PR Newswire PR NewswireJuly 20, 2017
CHARLOTTE, N.C., July 20, 2017 /PRNewswire/ -- Nucor Corporation (NUE) announced today consolidated net earnings of $323.0 million, or $1.00 per diluted share, for the second quarter of 2017. By comparison, Nucor reported net earnings of $356.9 million, or $1.11 per diluted share, for the first quarter of 2017 and net earnings of $243.6 million, or $0.76 per diluted share, for the second quarter of 2016.
In the first half of 2017, Nucor reported consolidated net earnings of $679.9 million, or $2.11 per diluted share, compared with consolidated net earnings of $331.2 million, or $1.03 per diluted share, in the first half of last year.
Earnings (loss) before income taxes and noncontrolling interests by segment were as follows for the second quarter and first six months of 2017 and 2016 (in thousands):
Three Months (13 Weeks) Ended
Six Months (26 Weeks) Ended
July 1, 2017
July 2, 2016
July 1, 2017
July 2, 2016
Steel mills
$ 617,366
$ 530,727
$ 1,301,527
$ 811,099
Steel products
45,809
82,946
72,731
125,313
Raw materials
66,227
(27,181)
92,618
(90,553)
Corporate/eliminations
(221,266)
(196,608)
(409,765)
(286,412)
$ 508,136
$ 389,884
$ 1,057,111
$ 559,447
Included in the first quarter of 2017 earnings are inventory related purchase accounting charges of $9.8 million, or $0.02 per diluted share, associated with the recent acquisitions of Southland Tube and Republic Conduit.
Nucor's consolidated net sales increased 7% to $5.17 billion in the second quarter of 2017 from $4.82 billion in the first quarter of 2017 and increased 22% compared with $4.25 billion in the second quarter of 2016. Average sales price per ton in the second quarter of 2017 increased 5% from the first quarter of 2017 and increased 17% from the second quarter of 2016. Total tons shipped to outside customers were 6,748,000 tons in the second quarter of 2017, a 2% increase from the first quarter of 2017 and a 5% increase from the second quarter of 2016. Total second quarter steel mill shipments increased 3% from the first quarter of 2017 and increased 7% from the second quarter of 2016. Second quarter of 2017 downstream steel products shipments to outside customers increased 9% from the first quarter of 2017 and increased 1% from the second quarter of 2016.
In the first half of 2017, Nucor's consolidated net sales increased 25% to $9.99 billion, compared with $7.96 billion in last year's first half, and total tons shipped to outside customers increased 6% from the first half of 2016, while average sales price per ton increased 19%.
The average scrap and scrap substitute cost per ton used during the second quarter of 2017 was $313, an increase of 10% from $284 in the first quarter of 2017 and an increase of 35% compared with $232 in the second quarter of 2016. The average scrap and scrap substitute cost per ton used in the first half of 2017 was $298, an increase of 40% from $213 in the first half of 2016.
Overall operating rates at our steel mills increased to 90% in the second quarter of 2017 as compared to 89% in both the first quarter of 2017 and the second quarter of 2016. Operating rates for the first half of 2017 increased to 90% as compared with 84% for the first half of 2016.
Total steel mill energy costs in the second quarter of 2017 were comparable to the first quarter of 2017 and increased approximately $2 per ton compared to the second quarter of 2016, primarily due to higher natural gas unit costs. Total steel mill energy costs for the first half of 2017 also increased $2 per ton compared to the first half of 2016 primarily due to higher natural gas unit costs.
Our liquidity position remains strong with $1.6 billion in cash and cash equivalents and short-term investments, as of July 1, 2017, and an untapped $1.5 billion revolving credit facility that does not expire until April 2021.
In May, Nucor announced that it is investing an estimated $176 million to build a hot band galvanizing and pickling line at its sheet mill in Ghent, Kentucky. The new galvanizing line will expand Nucor Steel Gallatin's product capabilities and should have an annual capacity of 500,000 tons. Once the necessary approvals are obtained, it is expected to take two years to construct the galvanizing line and begin operations.
In June, Nucor's board of directors declared a cash dividend of $0.3775 per share payable on August 11, 2017 to stockholders of record on June 30, 2017. This dividend is Nucor's 177th consecutive quarterly cash dividend, a record we expect to continue.
Imports continue to negatively impact the U.S. steel industry. Through the first half of 2017, finished steel imports have increased an estimated 15% compared to the same period last year and account for an estimated 27% share of the U.S. market. The industry continues to pursue trade cases to combat unfairly traded imports. Final determinations issued earlier this year against cut-to-length steel plate imports from twelve countries are having a positive impact as steel imports of these products have decreased in the first six months of this year compared to the same period last year. Last month, the U.S. International Trade Commission made final injury determinations affirming the Department of Commerce's antidumping duties in the steel concrete reinforcing bar (rebar) case against Japan and Turkey, as well as final countervailing duties on rebar imports from Turkey. A final decision regarding Taiwan is still pending. In May, the government determined that there is a reasonable indication that the U.S. steel industry is materially injured or threatened with material injury by reason of carbon and certain alloy steel wire rod imports from ten countries. As a result, the government will continue its wire rod antidumping and countervailing duty investigations, and is expected to issue preliminary duty determinations in the coming months.