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Nucor forecasts record quarterly earnings in Q1 on strong steel demand, operations

Posted on 10 February 2021

Nucor expects to generate record quarterly earnings in the first quarter as its various steel-producing segments exhibit strong performance due to solid end-market demand, the company said Feb. 9.

"We are encouraged by positive economic trends and the robust demand we are seeing across our markets," Nucor CEO Leon Topalian said in a statement updating the company's first quarter financial forecast.

Topalian said Nucor's net earnings could reach $900 million in the quarter, outpacing the company's previous record for quarterly net earnings set in 2008.

The steel producer said its sheet, plate, bar and structural mills are projected to increase quarter-on-quarter profitability in Q1 due to rising realized prices and shipment volumes. Additionally, higher raw material prices are expected to boost financial performance in Nucor's raw materials segment, the company added.

However, Q1 performance for Nucor's downstream steel products segment should be similar to fourth-quarter profitability.

"Nucor has elected to provide this update due to what it sees as an unusually large gap between its internal forecast and the current mean estimate for its first quarter earnings," Nucor said. "Strong January operating results, as well as recent revisions to internal forecasts, reinforce Nucor's confidence in its expected results."

In January, Topalian told investors that steel demand in the automotive sector looked bullish for 2021 with the industry rebounding from closures caused by the coronavirus pandemic. Demand growth in the renewable energy sector has also been offsetting some weakness in the oil and gas markets, he added.

"Our sales to the renewable power sector have been very strong this year with steelmaking segment orders related to these markets growing by double digits compared to the 2019 total," Topalian said during an earnings call. "The renewable power market is one Nucor is targeting, and many of our steel and steel products are essential to its continued buildout."

Topalian said healthy nonresidential construction demand was also expected to continue in 2021 despite contrary forecasts.

"We are aware of certain leading indicators signaling a downturn in nonresidential construction activity, but so far, we don't see much evidence of that," he said. "Our company is well positioned in attractive sub-segments of the nonresidential construction market."

Source : Platts