Nucor Sees Narrower Loss (Update)

Nucor offered up slightly improved guidance for its second quarter, and hinted that further acquisitions might be around the corner.
Author:
Publish date:

Updated from 11:19 a.m. EDT

Nucor

(NUE) - Get Report

issued a slightly more bullish outlook for its next quarter, saying losses will be narrower than expected.

The nation's biggest steelmaker and scrap-metal recycler also made a balance-sheet boast, hinting that its acquisitive ways may soon continue.

Nucor said it now expects its bottom line in the second quarter to show a per-share loss of between 55 cents and 65 cents. Analysts were looking for a 69-cent loss.

The famously non-union Charlotte, N.C., company -- which has refused to make any layoffs at all during the recession, instead putting workers on part-time duty -- attributed the slightly improved outlook to its "strong focus on overall cost reductions" and improved "order entry" in the last few weeks. That's industry-speak for, simply, the number of orders a manufacturer has logged from customers.

Recent reports from analysts and other industry-watchers have suggested that demand for steel, and therefore pricing, has strengthened recently, especially at so-called electric-arc furnaces -- or mini-mills -- which Nucor specializes in.

Others have remained cautious. Standard & Poor's analyst Leo Larkin, who covers mining and metals equities, was looking for Nucor to lose 55 cents a share in the second quarter. The company -- and the steel industry at large -- continues to battle high raw materials costs and still-weak demand in its end markets, such as construction. Larkin, in a note, maintained his sell rating on the stock.

In a statement issued before the bell Tuesday, Dan DiMicco, Nucor's chairman, CEO and president, made obligatory remarks about the "uncertain" economic outlook and "structural challenges facing the U.S. and global economies."

But he went on to say that the recession "will present unusually attractive growth opportunities for Nucor." He wasn't more specific, but he mentioned the company's strong balance sheet, which would suggest that he intends to pursue future acquisitions. As of the end of the last quarter, Nucor had $1.9 billion in cash and $3.1 billion in debt.

Under DiMicco, who took over as CEO in 2000, the company has been far more acquisitive than its peers. Essentially a chain of mini-mills and scrap recycling plants, Nucor has snapped up nearly 30 businesses, including 10 mills, since DiMicco came aboard. Its last big deal was the $1.4 billion purchase of David J. Joseph, a scrap-metal broker, last year.

Nucor shares were trading higher midday Tuesday, though they've cooled off a bit since this morning. They changed hands recently at $46.97, up $1.22, or 4.7%.

Other steelmaker shares were mixed Tuesday afternoon after gaining ground early.

U.S. Steel

(X) - Get Report

was up just slightly at $37.16;

Steel Dynamics

(STLD) - Get Report

inched lower by 3 cents to $15.21; and

AK Steel

(AKS) - Get Report

was up 1.6% to $18.61.

ArcelorMittal's

(MT) - Get Report

American depository receipts, meanwhile, slipped 33 cents to $32.45.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.