Steel Dynamics Sees Brighter 2010

Steel Dynamics' outlook for 2010 brightens as orders firm on the back of a "gradually improving" economy.
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(Steel Dynamics item updated to provide further detail from the company's earnings release, and for stock price movement.)

FORT WAYNE, Ind. (

TheStreet

) --

Steel Dynamics

(STLD) - Get Report

offered a hopeful view of its business for the rest of the year as the company, a major producer of flat-rolled and structural steel, issued first-quarter earnings that topped Wall Street expectations.

Steel Dynamics didn't provide specific numerical guidance, but in a statement, CEO Keith Busse said, "We now see a more stable and positive outlook for the coming quarter and second half of 2010." The company, he said, has seen "firmer order backlogs for our mills," a result of a "gradually improving economy with moderate strengthening of steel demand."

At least one analyst believes the measured statement from Steel Dynamics means an "upward trend in earnings" for the coming quarters. "We would expect a positive market reaction to last night's release," said Mark Parr, a steel analyst at KeyBanc Capital Markets, in a note to clients Tuesday morning.

Steel Dynamics' CEO Busse cautioned, however, that one major end-market for the company's products will likely remain a drag on its results. "We have not seen signs of a significant rebound in our construction-related businesses, which means these operations will likely continue to negatively impact our results," Busse said.

The company, one of the

first major U.S. steelmakers to issue results this earnings season

, reported a profit of $65 million, or 29 cents a share, on sales of $1.6 billion, outstripping analysts' quarterly targets, according to a

Thomson Reuters

survey of the sell side, which called for earnings of 25 cents on sales of $1.37 billion.

A year ago, Steel Dynamics earned $27 million, or 12 cents a share, on revenue of $1.2 billion.

The company said mills in its largest segment, flat-rolled steel, ran at capacity during the first quarter, signaling that customer orders have strengthened. Parr attributed the "brisk activity" in the flat-rolled business to rising demand from automakers and appliance manufacturers.

Shares of Steel Dynamics were nonetheless slightly weaker in midday trading Tuesday, down 6 cents, or 0.3%, to $17.46. Volume was heavy at 9 million shares, compared with average daily turnover of 5.5 million.

AK Steel

(AKS) - Get Report

, meanwhile, reported results that matched Wall Street targets Tuesday morning, though the company

warned that rising iron ore costs

could crimp its profits in the second quarter and the rest of the year.

The company depends to a much greater extent than other U.S. steelmakers on outside sources for its raw-materials feedstocks.

Shares of AK Steel were falling sharply Tuesday, down more than 5% on heavy volume.

-- 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.