Nucor's Profit Drops 86% - TheStreet

Nucor's Profit Drops 86%

The steel producer says high energy and scrap-metal costs took a toll.
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Second-quarter earnings plummeted 86% at

Nucor

(NUE) - Get Report

as high energy and scrap-metal costs took their toll.

The steel producer reported Friday that it earned $8.4 million, or 11 cents a share, for the quarter, compared with $59.7 million, or 76 cents a share, for the same quarter last year. That gives it total first-half earnings in 2003 of $26.2 million, or 33 cents a share, compared with last year's $80 million, or $1.02 a share, for the same period.

The results fell below Wall Street's forecasts, which predicted second-quarter earnings of 22 cents a share for Nucor, according to a poll of 10 analysts conducted by Thomson First Call.

Shares of Nucor were down Friday morning by $3.27, or 6.5%, at $46.91.

Net sales for the quarter increased 27% to $1.52 billion, compared with last year's $1.198 billion, but higher-than-expected scrap and energy costs, severely depressed levels of nonresidential construction and capital goods markets, increased operating costs, and unexpected production downtime at mills in Alabama and North Carolina ravaged the bottom line.

The average cost of scrap metal per ton increased $25 from the first half of 2002 to the first half of 2003, and total energy costs increased around $4 per ton from the first half of 2002 to the first half of 2003, according to the company.

The beleagured U.S. steel industry, suffering from rising health-care and pension costs, has seen more than 35 producers file for Chapter 11 since 1997.

Nucor said it expects third-quarter earnings of 15 cents to 20 cents per share, while First Call's consensus estimate stands at 39 cents a share.