PORTLAND, Ore. (AP) â¿¿ Blaming low prices and volumes, Schnitzer Steel Industries Inc. on Tuesday posted a weak outlook for the September through November period. Its prediction for the quarter, its fiscal first, fell well below Wall Street's expectation.
The company is cutting costs as demand for many products decline due to the weak economy. Excluding $2 million in restructuring charges, it expects to break even in its most recent quarter.
Analysts, on average, expect a profit of 14 cents per share, according to a FactSet poll.
The company typically releases full results for its fiscal first quarter in early January.Despite unexpected improvements in the steel industry, Schnitzer is dealing with weak results in its metal recycling and auto parts businesses, said Jefferies analyst Luke Folta. Folta backed his "Hold" rating for Schnitzer, but cut his price target for the company by $4 to $27, saying that he sees continuing challenges for metal recyclers. Schnitzer said Tuesday that it expects sales volumes to decline in its scrap metal recycling business from the June-August quarter â¿¿ 20 percent for metals that include iron, 30 percent for metals that don't have iron. Average selling prices have dropped 5 percent for metals with iron, and risen 5 percent for metals without it. Lower commodity prices will likely drive revenue 5 percent lower in the September-November quarter from the previous three months, Schnitzer said. Schnitzer shares dropped 83 cents, or 3 percent, to $27.25 in afternoon trading.