Why Nucor and Steel Dynamics Expect Their 1Q17 Profits to Surge



1Q17 profits

Nucor (NUE) expects to post earnings per share (or EPS) between $1.10–$1.15 in 1Q17. To put this in context, consider that the company posted EPS of $0.50 in 4Q16 and $0.27 in 1Q16. Let’s see why Nucor expects its profits to surge in 1Q17.

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Key drivers

Nucor noted during its 1Q17 earnings guidance on March 16, “The expected improvement in earnings in the first quarter of 2017 compared to the fourth quarter of 2016 is primarily due to the performance of our steel mills segment. The increased profitability of the steel mills segment is driven by the improved performance of our sheet and plate mills.”

However, Nucor expects the profitability of its Downstream Steel Products segment to fall in 1Q17 due to typical seasonal slowdown. In its Raw Materials segment, Nucor expects its 1Q17 profits to be higher than in 4Q16 despite an unplanned outage at its Louisiana plant. The company attributed the expected increase in profits to its scrap processing, Trinidad direct reduced iron facility (CLF) (MT) (X), and brokerage operations.

Steel Dynamics

Steel Dynamics (STLD) expects its 1Q17 EPS to be between $0.77–$0.81 compared to $0.26 in 1Q16 and $0.08 in 4Q16. Steel Dynamics noted during its 1Q17 earnings guidance on March 16, “First quarter 2017 average steel product pricing is expected to increase, more than offsetting the additional expense derived from higher ferrous scrap costs. The anticipated higher earnings are driven by the company’s flat roll operations, as demand remains strong and customer inventory levels continue to be positioned at historically low levels.”

In the next article, we’ll see what analysts are projecting for Nucor’s 1Q17 earnings.


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