Nucor announced today guidance for its third quarter ending October 1, 2016, expecting results to be in the range of $0.85 to $0.90 per diluted share. This range is an increase compared to the second quarter of 2016 consolidated net earnings of $0.73 per diluted share and the third quarter of 2015 earnings of $0.71 per diluted share.
The expected improvement in earnings in the third quarter of 2016 compared to the second quarter of 2016 is primarily due to the performance of the steel mills segment and raw materials segment. The profitability of Nucor’s sheet mills is expected to improve due to higher average selling prices, which benefited in part from contract sales that are priced on a lagging quarterly basis.
Demand for cold-rolled and galvanized sheet products is “robust,” according to the statement, but demand for hot-rolled sheet products has weakened since the first half of the year. Market conditions for the plate and bar mills “continue to be challenging” due to high levels of imports. The steel mills segment is expected to benefit from low service center inventory levels and lower scrap costs over the remainder of the year. Energy, heavy equipment and agricultural markets remain weak. The automotive markets remain strong.
Nucor expects the performance of the raw materials segment in the third quarter of 2016 to be “significantly improved” compared to the second quarter of 2016 due to the improved performance of our DRI facilities, which are expected to be profitable for the quarter. Nucor expects decreased profitability for the steel products segment in the third quarter of 2016 as compared to the second quarter of 2016 due to margin compression. The company said it continues to see gradual improvement in nonresidential construction markets and believes the performance of the steel products segment for the full year 2016 will be improved compared to 2015.