MAY 2010

Schnitzer Steel reports strong 2Q earnings

Schnitzer Steel Industries, Inc. reported diluted earnings per share from continuing operations of $0.62 for its fiscal 2010 second quarter ended February 28, 2010. This compares with a diluted loss per share from continuing operations of ($0.18) for the same quarter of fiscal 2009.

“This marks our highest level of earnings since the downturn began in the first quarter of fiscal 2009. Our second quarter results reflect strong operational performance, as well as continued broad-based demand for recycled metals,” said Tamara Lundgren, president and chief executive officer.

Drivers of the results, by business unit, for the second quarter, included:

  • The Metals Recycling Business successfully capitalized on ongoing demand from export customers. Total sales volumes of processed ferrous metals were at record levels for the second quarter. The business saw improvements in net sales prices and margins, with operating income of $29 million and an operating profit margin of $24 per ferrous ton, up from $21 per ferrous ton in the first quarter of fiscal 2010.
  • The Auto Parts Business generated record second quarter operating income of $13 million, double the previous record of $6 million set in the second quarter of fiscal 2008. The improvement in operating profit margin, to 23 percent, reflected a strong operational performance and improved metal spreads. Vehicle purchases approximated the levels of the first quarter of fiscal 2010, excluding the benefit of the federal Cash-for-Clunkers program in the first quarter.

The Metals Recycling Business saw improved results in the fiscal 2010 second quarter compared with recent comparable periods.

Export customers accounted for 79 percent of the ferrous sales volume. China, accounting for less than one-third of the total export volumes, was the top export destination, followed by South Korea, Thailand and Turkey, with shipments in the quarter to 10 countries.

Nonferrous sales volumes were broadly in line with the volumes in the first fiscal quarter of 2010 and were up sharply over last year’s second fiscal quarter.

Ferrous scrap net sales prices averaged $297 per ton in the second quarter of fiscal 2010, at the high end of the range of $237 to $326 per ton for the second fiscal quarters beginning in 2007. Ferrous prices reflected the broad-based demand in both the export and domestic markets.

Nonferrous sales prices improved slightly in the second quarter over the first quarter, but were nearly double the levels in the second quarter of fiscal 2009.

The higher volumes and prices in the second fiscal quarter of 2010 drove revenues up 45 percent compared with the second quarter of 2009 and 55 percent compared with the first quarter of fiscal 2010, as expected.

Ferrous and nonferrous net sales prices are expected to be improved in the third fiscal quarter of 2010 compared with the second quarter.