FORT WAYNE, INDIANA, March 11, 2009 – Steel Dynamics, Inc.
(NASDAQ-GS: STLD) today updated its outlook for the first quarter of
2009. Due to continued weakness in market conditions, the company is
reducing its first quarter estimate of earnings from $0.05 to $0.10 per
diluted share, provided January 26, to a loss of $0.40 to $0.45 per
diluted share. Notably, an estimated $70 million, approaching $.25 per
diluted share, of these estimated losses relate to non-cash inventory
adjustments required to reflect current market conditions at our Flat
Roll Division.
The principal non-inventory adjustments related to changes in our
outlook are driven by weaker than expected shipping volumes at our steel
operations and continued weakness in the metals recycling segment of
our business.
Demand for steel products remained soft through February, resulting
in lower production rates (as low as 30 percent at some of our
facilities) and a lower volume of steel shipments. Despite these very
low utilization rates and excluding the $70 million loss related to
inventory write downs, our steel operations are expected to report a
pre-tax profit for the first quarter.
Our metals recycling operations are expected to report a loss for the
first quarter as scrap prices continue to fall and recycled-metals
shipping volumes come in much lower than projected. Our earlier January
forecast was based on achieving a small pre-tax profit in this segment
of our business. OmniSource continues to experience very weak demand and
limited flows of ferrous and nonferrous scrap; however, we believe
operating profits will moderately return in the second quarter. The
supply of both industrial and “obsolete” scrap and the demand for
processed metals are greatly affected by the slowdown in the U.S.
economy, and in particular, the reduced demand by steel mill and foundry
consumers. Demand weaknesses in the automotive and construction sectors
of the economy are the primary drivers.
“The outlook for the remainder of 2009 remains clouded. We are
currently not able to clearly project volumes and financial performance
for the rest of the year,” said Keith Busse, Chairman and CEO of Steel
Dynamics. “We had earlier suggested the possibility of 2009 earnings
that could be comparable or close to those of 2008, but we now recognize
that the entire year of 2009 will be more challenging. We firmly
believe that throughout the remainder of the year, with our even further
improved cost structure and with our proven efficient operational
strength, we will see stronger margins and a much improved earnings
outlook. Our current liquidity position is continuing to improve and we
remain poised to quickly capitalize on any demand improvements.”
Forward Looking Statements
Contact:
Fred Warner, Investor Relations Manager
(260) 969-3564
f.warner@steeldynamics.com |