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Last Update: 16-Dec-11 10:44 ET
Steel Dynamics Up Over 3% Despite Issuing Downside Guidance
Steel Dynamics (STLD $12.75 +0.40) is showing nice gains this morning following its negative earnings guidance this morning.
Earlier, the company announced that it expects fourth quarter earnings of $0.08 to $0.12 per share, well below the $0.18 Capital IQ Consensus Estimate; there was an estimated 25% drop in anticipated fourth quarter flat rolled earnings and an estimated $10 million reduction in earnings from the co's liquid iron production facility, Iron Dynamics (IDI).
The reduction in fourth quarter IDI earnings was attributable to a planned three week shutdown during October and Nov for the relining of the facility's submerged arc furnace, resulting in an anticipated 20% decrease in quarterly shipments and increased expenses of just over $3 million related to the project. Iron Dynamics achieved a time span of two years since the previous relining, a record. Flat rolled demand during October and the first part of November was weaker, and early in the quarter pricing remained a challenge, reducing anticipated volumes. Additionally, the cost of raw materials consumed did not decline in step with realized flat rolled steel prices, which resulted in reduced fourth quarter anticipated margins. As increases in order entry and pricing occurred late in the fourth quarter, these positive factors did not materially impact fourth quarter performance, but are expected to be beneficial to the first quarter of 2012. Overall, continued uncertainty within the U.S. and global economies continues to impact corporate and consumer spending, resulting in a challenging demand environment. However, demand improvement is occurring in the energy, construction equipment, agricultural, and automotive sectors. The co believes if more stability develops into next year demand could be expected to increase, along with steel pricing and margins.
Earlier, the company announced that it expects fourth quarter earnings of $0.08 to $0.12 per share, well below the $0.18 Capital IQ Consensus Estimate; there was an estimated 25% drop in anticipated fourth quarter flat rolled earnings and an estimated $10 million reduction in earnings from the co's liquid iron production facility, Iron Dynamics (IDI).
The reduction in fourth quarter IDI earnings was attributable to a planned three week shutdown during October and Nov for the relining of the facility's submerged arc furnace, resulting in an anticipated 20% decrease in quarterly shipments and increased expenses of just over $3 million related to the project. Iron Dynamics achieved a time span of two years since the previous relining, a record. Flat rolled demand during October and the first part of November was weaker, and early in the quarter pricing remained a challenge, reducing anticipated volumes. Additionally, the cost of raw materials consumed did not decline in step with realized flat rolled steel prices, which resulted in reduced fourth quarter anticipated margins. As increases in order entry and pricing occurred late in the fourth quarter, these positive factors did not materially impact fourth quarter performance, but are expected to be beneficial to the first quarter of 2012. Overall, continued uncertainty within the U.S. and global economies continues to impact corporate and consumer spending, resulting in a challenging demand environment. However, demand improvement is occurring in the energy, construction equipment, agricultural, and automotive sectors. The co believes if more stability develops into next year demand could be expected to increase, along with steel pricing and margins.
