Nucor expects improved performance and higher earnings in Q4 2020 compared with Q3 due to price recovery at its sheet and plate mills.
The steelmaker also predicted earnings in the raw materials segment to increase in Q4 against the last quarter due to higher margins at its direct reduced iron facilities. However, the continuing COVID-19 pandemic has caused uncertainty, making it difficult for Nucor to estimate upcoming market conditions and demand trend outlook. Also, seasonal slowdown usually occurs during Q4 within several markets the firm serves.
Market conditions were strong throughout Q3 2020 in the nonresidential construction sector, while the recovery in the auto industry picked up the pace. This resiliency led to strong Q3 results in Nucor’s steel products segment with improved earnings compared to Q2.
The company’s steel mills segment improved in Q3 2020 compared to the previous quarter on growth in its bar and structural mills. Earnings in Nucor’s raw materials section increased last quarter compared with Q2 2020 as steel demand and prices improved, though the company’s sheet and plate mills faced difficult market conditions during the quarter.
The steelmaker’s mill operating rates rose to 83pc in Q3 2020, compared with 68pc in the previous quarter, and were relatively flat from Q3 2019. Operating rates in January-September 2020 dropped to 80pc from 85pc during the first nine months of 2019.
Nucor’s steel mills shipments totaled 5.63mn nt (5.1mn mt) in Q3 2020, declining by 3pc from 5.79mn nt in Q3 2019. In the first nine months of 2020, Nucor’s steel mill shipments dropped by 4pc to 16.89mn nt from 17.58mn nt during the same period in 2019.
The steelmaker’s total sales tons to outside customers in Q3 2020 declined by 3pc to 6.37mn nt from 6.56mn nt in Q3 2019. Total tons sold to outside customers in January-September fell by 5pc to 19.03mn nt from 20.05mn nt in during the same period last year.
The company’s net sales declined by 10pc to $4.93bn in Q3 2020 from $5.46bn in the same year-ago period. In the first nine months of 2020, Nucor’s net sales fell 15pc to $14.88bn from $17.46bn in January-September 2019.
Nucor generated consolidated net earnings of $193.4mn in Q3 2020, compared with $275mn in Q3 2019. Consolidated net earnings for the first nine months of 2020 were $322.6mn compared with $1.16bn during the same period last year.