Schnitzer Steel Records Loss, Expands Buyback

Portland, Ore. -- Schnitzer Steel (SCHN Quote) on Thursday reported a fiscal first-quarter loss due to a drop in demand for recycled metals and finished steel products.

The Portland, Ore.-based company posted a loss of $34 million, or $1.21 per share, compared with a profit of $24.7 million, or 85 cents per share, in the year-ago period.

Analysts surveyed by Thomson Reuters expected a loss of 75 cents per share.

Revenue for the quarter ended Nov. 30 fell more than 17% to $498.6 million from $603.9 million. Analysts expected $417.4 million in revenue.

"The weak economic environment and the worldwide financial crisis resulted in a rapid and precipitous drop in both sales volumes and sales prices from those experienced in the previous quarter in all of our businesses," said Tamara Lundgren, president and CEO, in a statement.

Schnitzer said that since the middle of the quarter it has cut full-time jobs by more than 10%, reduced production an average of 40% and lowered selling, general and administrative expenses.

The reduced production output will allow Schnitzer to bring its inventory more in line with market demand, the company said.

The company also said its board of directors increased the company's stock buyback authorization by 3 million shares.

The move brings the company's total number of shares available for repurchase to 4.5 million.

The Portland, Ore.-based steel producer also reported a fiscal first-quarter loss and predicted a decline in second-quarter revenue.

Shares of the company rose $1.72, or 4.5%, to $39.97 in morning trading. The stock has ranged from $16.45 to $118.55 over the past year.