uploads///part  steel products margins

Nucor’s Steel Product Segment Saw Improved Profit Margins in 2Q15

By

Oct. 1 2015, Updated 2:05 a.m. ET

Nucor Steel Products segment

Nucor Corporation’s (NUE) Steel Products segment manufactures products including steel joists, decks, and fabricated rebar products. These products are used in nonresidential construction industry.

Nucor, the largest steel company in the US, is the leading supplier to the nonresidential construction sector. Commercial Metals Company (CMC) and Gerdau SA (GGB) are the other leading suppliers to the nonresidential construction sector.

Together, Commercial Metals Company and Reliance Steel & Aluminum (RS) form ~9.8% of the SPDR S&P Metals and Mining ETF (XME).

Article continues below advertisement

Steel Product segment’s profit margins improve

As the chart above shows, Nucor’s Steel Products segment’s pre-tax profit margins improved in 2Q15. And while shipments fell by ~3% YoY (year-over-year) in 2Q15, the segment’s average steel selling prices have been quite stable.

3Q15 outlook

Nucor expects its Steel Products segment’s performance to further improve in 3Q15, compared to 2Q15, in part because the company has a stronger order backlog in comparison with previous quarters. The company maintained that these order backlogs have stronger pricing than it has “seen in quite some time.”

Nucor’s CEO has said that he sees “things over the course of the year slowing a little bit more compared to last year.” But he also expressed optimism about the overall health of nonresidential construction sector.

Nucor’s Raw Material segment has been generating losses for last few quarters. In the next part of this series, we’ll discuss why the segment has been bleeding red ink and if things look any better for 3Q15.

Advertisement

More From Market Realist

  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.