Steel Dynamics, Inc. today announced fourth quarter and annual 2022 financial results. The company reported fourth quarter 2022 net sales of $4.8 billion and net income of $635 million.
Comparatively, the company's sequential third quarter 2022 earnings were $918 million, on net sales of $5.7 billion. Prior year fourth quarter earnings were $1.1 billion, on net sales of $5.3 billion.
In a press release, Mark D. Millett, Chairman, President, and Chief Executive Officer commented, “Domestic steel demand was solid throughout the year supported most significantly by the construction, automotive, industrial, and energy sectors. Customer steel inventories remained at below historical averages for most of the year, allowing for steady order patterns. Our steel operations achieved record 2022 annual shipments of 12.2 million tons and its second highest annual operating income of $3.1 billion. The strength in the non-residential construction market drove earnings for our steel fabrication business, resulting in record annual shipments of 856,000 tons and record 2022 operating income of $2.4 billion.”
Fourth quarter 2022 operating income for the company's steel operations was $178 million, lower than sequential third quarter results, based on seasonally lower shipments and metal spread compression, particularly within the company's flat rolled operations. Metal spread compression was amplified by higher raw material costs, as the company's steel operations work through high priced pig iron ordered in early 2022 in reaction to the Ukraine and Russia supply-chain disruptions. The fourth quarter 2022 average external product selling price for the company's steel operations decreased $257 sequentially to $1,124 per ton. The average ferrous scrap cost per ton melted at the company's steel mills declined $58 to $414 per ton.
The company's steel fabrication business achieved another record quarter, with operating income of $682 million, based on steady realized selling values, lower steel input costs, and a continued steady non-residential construction demand environment. Fourth quarter 2022 steel fabrication shipments of 209,000 tons were strong, and the outlook remains positive, supported by strong product pricing and the company's order backlog extending well into 2023.
For the full-year 2022 results, Steel Dynamics reported annual 2022 net income of a record $3.9 billion with record net sales of $22.3 billion, as compared to net income of $3.2 billion with net sales of $18.4 billion in 2021.
The company said annual 2022 record net sales increased 21 percent and operating income increased 18 percent to a record $5.1 billion, when compared to 2021. Higher net sales and earnings were driven by record product pricing and volume within the company's steel fabrication business, resulting in record annual segment operating income of $2.4 billion. In comparison to last year, average 2022 annual steel fabrication selling values more than doubled to $4,976 per ton. Operating income for the company's steel operations was $3.1 billion in 2022, based on record volume and stable average steel product pricing coupled with a six percent increase in average per ton melted scrap costs.
As for an outlook, Millett said, “Customer order entry activity continues to be healthy across our businesses. Steel pricing has firmed, and our order activity and backlogs remain solid. We believe North American steel consumption will increase in 2023, and that demand for lower-carbon emission, US produced steel products coupled with lower imports will support steel pricing. Our steel fabrication operation's order backlog also remains historically strong based on volume and forward pricing levels reaching past the first half of 2023. Since acquiring ROCA in October, their integration into our Mexican metals recycling operations is also proceeding well and will benefit our scrap and steel businesses in 2023. This environment, in combination with our existing and recently announced expansion initiatives, are firm drivers for our continued growth in the coming years.”