STLD’s earnings

On April 22, Steel Dynamics (STLD) released its first-quarter earnings results, becoming the first major steel company to report its quarterly performance.

Nucor (NUE) is scheduled to release its earnings results on April 23, while AK Steel (AKS) and U.S. Steel Corporation (X) are expected to release their first-quarter earnings results next week.

Steel Earnings Start on a Somber Note with Steel Dynamics’ Miss

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Steel Dynamics’ earnings were worse than expected in terms of both its top and bottom lines. The company posted revenue of $2.82 billion in the first quarter. It posted revenues of $2.90 billion in the fourth quarter and $2.60 billion in the first quarter of 2018. Analysts polled by Thomson Reuters had expected Steel Dynamics to post revenue of $2.83 billion in the first quarter of 2019.

Steel Dynamics posted EPS of $0.91 in the first quarter. It posted EPS of $1.17 in the fourth quarter and $0.96 in the first quarter of 2018. While its earnings were within the guidance range it had provided, they missed analysts’ consensus estimate. Analysts had expected the company to post EPS of $0.98 in the quarter.

Steel Dynamics’ first-quarter guidance also spooked investors, as the company projected a year-over-year fall in its earnings.

Key drivers

Steel Dynamics attributed its lower earnings to margin compression. According to the company, “The first quarter 2019 average product selling price for the company’s steel operations decreased $38 to $902 per ton. The average ferrous scrap cost per ton melted only decreased $5 to $338 per ton.”

US spot steel prices started falling in the fourth quarter of 2018, and the trend continued into 2019. However, we’ve started to see some stability in US steel prices in the last month.

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