Nucor Corp. said Thursday its first-quarter profit jumped sharply as consumers spent more money for long-lasting products like appliances and automobiles.
Nucor also forecast improving business conditions for the second quarter, seeing a turnaround under way after struggling with dismal demand from the recession-battered automobile and construction industries last year.
The company. based in Charlotte, N.C., is among a handful of steelmakers that have seen demand strengthen this year, although it's a mixed bag. Markets for consumer products are stronger; construction remains challenging.
In addition, steelmakers that buy iron ore in the marketplace likely will face cost increases because of a new international system that allows prices to be set quarterly instead of annually.
For example, AK Steel Holdings Corp. this week reversed a first-quarter loss and posted a profit on higher sales, but warned a steep rise in iron ore prices will hurt second-quarter results.
Nucor produces steel from scrap metal, using electric instead of blast furnaces. Steelmakers like that are improving, Steel Market Intelligence analyst Michelle Applebaum said.
For the quarter that ended April 3, Nucor had net income of $31 million, or 10 cents a share. A year ago, the company posted a net loss of $189.6 million, or 60 cents per share.
The quarter included a $24 million credit from an accounting method for inventory.
Revenue surged nearly 40 percent to $3.65 billion.
Analysts polled by Thomson Reuters predicted, on average, earnings of 6 cents a share on revenue of $3.6 billion. Such estimates typically exclude one-time items.
Operating rates for its steel mills increased to 73 percent, compared with 45 percent a year ago. Nucor said the average sales price per ton rose about 5 percent.
In addition, it cut total energy costs by about $10 per ton from a year ago.
"Overall, operating performance improved from the beginning of the quarter to the end of the quarter," the company said.
Although it did not provide specific guidance for the second quarter, the company expects to see continuing improvement in business conditions.
"They came right out and said they were going to do better next quarter. That's pretty solid guidance for them," Applebaum said.
Nucor's products include bars, beams, steel joists and girders, concrete reinforcing steel and wire used in construction.
Shares of Nucor rose 13 cents to $45.24 and shares of AK Steel rose 20 cents to $19.09 in afternoon trading.
Copyright 2010 AP News
