Earnings

Return to Article

Commercial Metals Posts 2Q Loss

The Associated Press

IRVING, Texas (AP) — Commercial Metals Co. posted a fiscal second-quarter loss Tuesday as the steel and metals maker and recycler struggled with declining prices and demand and the global credit crisis.

The Irving, Texas, company lost $35.3 million, or 32 cents per share, compared with a profit of $39.8 million, or 34 cents per share, in the year-ago period. Losses from continuing operations — which excludes results from businesses that have been, or are in the process of being sold — totaled $34.5 million, or a loss of 31 cents per share. In the year-ago quarter, the company posted earnings from continuing operations of $43 million, or 36 cents per share.

Revenue for the quarter ended Feb. 28 dropped 28 percent to $1.62 billion, from $2.3 billion in the year-ago quarter.

Analysts surveyed by Thomson Reuters expected a profit of 3 cents per share on revenue of $1.89 billion.

In response to falling prices and demand and the credit crisis, Commercial Metals said it recorded expenses of $103.1 million for market inventory adjustments, charges related to its exposure to contracted work that did not materialize, discontinued operations, a bad debt expense, severance costs and impairment charges.

"The deterioration of global steel markets continued during the quarter, reaching eastern and central Europe and Australia, our last markets of relative strength," said Murray R. McClean, chairman, president and chief executive.

Volumes, pricing and margins declined from the first quarter as destocking continued and demand remained weak, he said.

The company did not offer specific guidance for 2009, but said it anticipates a third-quarter loss less than the second quarter.

"It will be rough going for the balance of our fiscal year and likely for the remainder of calendar 2009," McClean said. "There are no sustainable catalysts absent solving the global liquidity crisis."

The company expects an increase in construction in the spring, but it will be seasonal rather than the result of recovery, he said.

And the federal stimulus spending will not have an impact until late this year "and even then expected to be modest," McClean said.

Wall Street analysts expect a profit of 29 cents per share in the third quarter, with sales of $2.03 billion.

Shares fell 49 cents, or 4.5 percent, to $10.57 in morning trading.