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Nucor, Channeling Eeyor, Is Gloomy on Bullish Day

CHARLOTTE, N.C. ( TheStreet) -- Nucor (NUE - Get Report), the big steelmaker, outdid Wall Street profit expectations when it reported second-quarter results before the opening bell Thursday, but the company continued to describe its near-term business prospects in cautious, downbeat tones.

In contrast to other industrial giants, from Caterpillar (CAT) to Freeport McMoRan (FCX) to 3M (MMM), which have enthused this earnings season about a building recovery, Nucor once again introduced its own bit of worry and gloominess into the proceedings, like Eeyore.

In a statement, Nucor said, "The continuation of the upward trend experienced through the first half of the year is by no means clear at present. There is a general slowdown taking place across all product lines as the overall economy has entered into a new period of uncertainty. This is the case both in the U.S. and globally."

Led by its outspoken CEO, Dan DiMicco, the company has a long history of offering up conservative takes on its business prospects.

It's true, thought, that a large chunk of Nucor's business is the manufacture and sale of steel used in rebar and I-beams. For the company to return to full health, then, Nucor requires the recovery of the construction industry, which by all accounts remains moribund. "The most challenging markets for our products continue to be those associated with residential and non-residential construction, which continue to show little, if any, strength," Nucor said in its earnings release. The language was almost identical to that used by the company over the last handful of quarters.

A host of concerns had spooked the steel industry heading into this earnings season, including the notion that steelmakers had increased capacity a bit too quickly in the first part of the year, getting ahead of real demand. Nucor appears to have responded to this. The company said overall operating rates at its mills fell slightly compared to the first quarter of the year, to 71% of total capacity from 73%.

In the second quarter, Nucor, a scrap-metal recycler that produces more steel than any other U.S. manufacturer, reversed a year-ago loss as prices for its steel jumped 25% from a year ago and shipments to outside customers rose 35%.
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