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Commercial Metals Company Reports Another Excellent Quarter for their Recycling Segment

Declares Quarterly Cash Dividend and expects Strong Fourth Quarter

Dallas, TX— Commercial Metals Company reported net earnings of $3.0 million or $0.11 per diluted share on net sales of $774 million for the quarter ended May 31, 2003. This compares with net earnings of $16.4 million or $0.56 per diluted share on net sales of $652 million for the third quarter last year.

Net earnings for the nine months ended May 31, 2003 were $8.2 million or $0.28 per diluted share on net sales of $2.1 billion. For the same period last year net earnings were $31.5 million or $1.13 per diluted share on net sales of $1.8 billion.

The current year quarter included a pre-tax LIFO expense of $5.2 million ($0.12 per diluted share) compared to pre-tax LIFO income of $211 thousand (no effect per share) in the prior year quarter. Comparable numbers for the nine months were $8.0 million expense ($0.18) this year and $155 thousand income ($0.01) in the previous year’s nine months.

CMC Chairman, President and Chief Executive Officer Stanley A. Rabin said, “Some of our key markets — particularly those for our Manufacturing segment — remained under pressure during the quarter, but improved modestly over the second fiscal quarter of this year. While public construction and institutional building were steady, commercial construction in the United States was off about 15% from last year, which continued to impact our downstream businesses as well as our steel mills. Additionally, business spending and the industrial side of the economy remained soft. On the other hand, we began to see some of the expected net benefit from the weaker U.S. dollar.”

Within Manufacturing, the CMC Steel Group minimills recorded a considerably lower profit compared with last year’s strong third quarter, exacerbated by their portion of this quarter’s LIFO expense ($3.9 million pre- tax) and despite higher sales, shipments and average selling price. Tons melted increased 1% to 572,000 tons while tons rolled decreased 2% to 544,000 tons. Shipments increased 4% to 634,000 tons on a year-to-year basis (although the increase was accounted for by higher billet shipments). The average total mill selling price increased $13 per ton above last year’s extraordinarily low price to $280 per ton; however, the average scrap purchase price rose faster at $22 per ton. The average selling price for finished goods increased $16 per ton to $289 per ton. Utility costs increased by over $3.5 million compared with the same period last year, with modestly higher electricity usage and modestly lower natural gas usage.

The third quarter of FY 2003 was another excellent quarter for the recycling segment following several strong quarters. The segment recorded an operating profit of $5.1 million, more than double the prior year quarter on 21% higher net sales dollars, with gross margins up 31%. This was after a pre-tax LIFO expense of $445 thousand. The profit stimulus mainly came from the steel scrap market, although prices peaked during the quarter as overseas demand slackened coupled with improved flows of obsolete scrap. Versus last year’s still relatively weak numbers, the average ferrous scrap sales price increased by $24 per ton to $110 per ton and shipments jumped 17% to 452,000 tons. Nonferrous markets improved moderately: the average nonferrous scrap sales price increased 5% compared with a year ago while nonferrous shipments were down 2%. Total volume of scrap processed, including our CMC Steel Group processing plants, equaled 768,000 tons against 667,000 tons last year.

During the third quarter Commercial Metals implemented two steel mill product price increases on most of their products totaling $35 per ton, which partly became effective in the fiscal third quarter and should become fully effective during the fourth quarter, which will help restore margins for their steel minimills. Strong demand for steel scrap and nonferrous scrap combined with the weaker U.S. dollar will lend support to the recycling segment, although ferrous prices will be below the third quarter. Aluminum and copper prices still appear to be range-bound. Marketing & Distribution results are expected to remain good, but not as favorable because of reduced demand in China and elsewhere.

The Board of Directors of Commercial Metals Company declared a quarterly cash dividend of eight cents per share on common stock to shareholders of record July 3, 2003. The dividend will be paid July 18, 2003. This is the 155th consecutive quarterly dividend paid by Commercial Metals Company.

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