Nucor earnings quadruple; economy improving

April 22--Nucor Corp.'s first-quarter earnings were more than four times its earnings in the first quarter of 2010, the company said Thursday.

During an earnings call, Chief Executive Dan DiMicco attributed some of the gains to a 33 percent increase in value-added, coated sheet metal production, including at the Decatur galvanized sheet-steel plant.

While demand for some steel products remains weak, DiMicco stressed the company is enjoying a rebound in economic conditions.

Even the nonresidential construction market, one of the worst-hit markets in the recession, is showing positive signs.

"Though nonresidential activity remains weak," President John Ferriola said, "the bottom of that important market appears to be behind us."

Net earnings for the first quarter of 2011 were $159.8 million, or 50 cents per diluted share, for the quarter ending March 31. The same quarter in 2010 left Nucor with net earnings of $31 million, or 10 cents per share.

Operating rates at Nucor steel mills also increased. After running at only 73 percent of capacity in the first quarter of 2010 and 68 percent in the fourth quarter, they were up to 80 percent in the first quarter of 2011.

The tsunami and earthquakes in Japan hurt domestic auto production, an increasingly important Nucor market, but officials expect reduced sales in the first quarter to bounce back later in the year.

Ferriola said the disruption in the auto market results from Japan's inability to produce and ship nonsteel auto components. This problem has delayed purchases of auto components using Nucor sheet metal, including that produced in Decatur.

"Typically as we come out of the second quarter and into the third quarter, we see a seasonal slowdown generated as a result of automotive shutdowns for retooling," Ferriola said. "The impact will be mitigated because of what's happening today with the supply of nonsteel, critical components from Japan. We see some pent-up demand in the automotive sector, which will release as these nonsteel components become more available. We believe that will mitigate the traditional slowdown we see at the end of the second quarter and going into the third quarter."

In Decatur, that means production slowdowns are less likely this summer.

"Hopefully we'll see a stronger summer than we usually see in the automotive sector," DiMicco added.

Nucor remains attuned to the risks posed by low-cost imports from China and other countries. A benefit from the recession, he said, is that manufacturers and steel distributors are maintaining lean inventories because the onset of the recession hurt those with large inventories. Because imports require a greater lead time, tight inventories tend to help Nucor with domestic customers.

"Customers today are buying just what they need and just when they need it," Ferriola said.

"We continue to see slow, steady improvement in real demand in certain end markets," Nucor said in a statement. "This is most evident in products sold to the manufacturing/industrial sector, including special bar quality products, sheet and plate."

Nucor's sheet mills in Decatur employ 720, with about 210 contract employees.

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