Nucor Beats, Says Outlook Improving

Nucor beats first-quarter estimates and says it expects improving results in the coming period.
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(Nucor earnings story updated to provide further detail from the company's press release, and to account for stock price movement.)

CHARLOTTE, N.C. (

TheStreet

) --

Nucor

(NUE) - Get Report

, the nation's biggest steelmaker by volume, exceeded profit targets for the first quarter and predicted accelerating results going into the second half of the year.

In its earnings release, issued before the opening bell Thursday, Nucor said it expects the "second quarter to be an improvement over our first quarter results."

Still, the company, whose key products include rebar and I-beams, continues to suffer from a depressed housing market and an almost total lack of construction projects. "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.

Nucor reported a profit of $31 million, or 10 cents a share, on revenue of $3.65 billion.

By comparison, analysts were calling for a bottom line of 6 cents a share and a top line of $3.6 billion.

A year ago, in the throes of the downturn, Nucor lost $190 million on revenue of $2.65 billion.

The company has struggled with pig-iron inventories and the high cost of raw materials -- in Nucor's case, scrap metal. The electric arc furnace operator uses recycled material as its primary feedstock.

In March, the company told Wall Street to ratchet back its target for the quarter, calling for a bottom line anywhere between a loss of five cents and a profit of five cents. But Nucor also said that orders from customers were trending higher, up more than 20% from a year ago.

Stockpickr Answers Why is Nucor trading down?

The company, in turn, has boosted production. Operating rates at its mills around the country jumped to 73% of their total capacity in the first quarter, Nucor said, a far busier level than the doldrums of the year-ago period, when the steelmaker was using only 45% of its capacity. Operating rates also improved sequentially from the fourth quarter's 58%.

Nucor shares, which have traded choppily since the start of the year, turned into the green Thursday afternoon after having lost ground earlier in the session. In recent trades, the stock was changing hands at $45.25, up 14 cents, or 0.3%, from the previous close.

The fairly positive news from Nucor contrasted with

Reliance Steel

(RS) - Get Report

, which provided a

disappointing outlook for its second quarter

and indicated that steel prices might not hold steady in the second half of the year, as steelmakers hike operating rates and supply hits the market.

Shares of Reliance, which operates metals distribution and service centers, were falling sharply Thursday, down 6%.

So far during this first-quarter reporting season,

steelmakers have turned in mixed results

. On Tuesday,

AK Steel

(AKS) - Get Report

said rising

iron ore costs could squeeze its profits

, but AK is far more exposed to the global cost of that crucial steel ingredient than other companies in the industry.

Steel Dynamics

(STLD) - Get Report

, meanwhile, which forges steel out of recycled scrap like Nucor, offered a

positive but somewhat vague outlook

for the rest of the year when it released quarterly results on Monday.

U.S. Steel

(X) - Get Report

, which has no exposure to iron ore costs, will release results April 27.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.