Nucor predicts a record quarterly profit in the first quarter due to strong demand for steel and vigorous production activity. All steel segments are performing well thanks to strong demand in end markets, according to the largest US steel company.
“We are encouraged by the positive economic trends and strong demand we are seeing in our markets,” said Nucor CEO Leon Topalyan in a statement updating the company’s first quarter financial outlook.
Topalyan said Nucor’s net income for this quarter could reach $ 900 million, surpassing the company’s previous record for quarterly net income set in 2008.
The steelmaker said its plate, bar and structured operations are forecast to improve profitability in the first quarter over the previous quarter, driven by higher sales prices and shipment volumes. In addition, higher raw material prices are expected to improve the financial performance of Nucor’s raw materials segment, the company added.
Nonetheless, Nucor’s steel refining and sales segment should be in line with the fourth quarter’s performance in the first quarter.
“Nucor decided to introduce this update because of what it sees as an unusually large gap between its internal forecast and its current average earnings estimate for the first quarter,” Nucor said. “Strong operating results for January, as well as recent revisions to internal forecasts, strengthen Nucor’s confidence in the expected results.”
In January, Topalyan told investors that demand for steel in the automotive sector in 2021 will be optimistic as the industry recovers from plant closures due to the coronavirus pandemic. He added that rising demand in the renewable energy sector will also offset some weakness in the oil and gas markets.
“Our sales to the renewable energy sector have been very strong this year: orders in the steel segment related to these markets have grown by double digits compared to the total in 2019,” Topalyan said during the statement of financial results. “The renewable energy market is the market that Nucor is targeting and many of our steel products are essential for its continued growth.”
Topalyan said that despite opposite forecasts, a healthy demand for commercial housing is expected to continue in 2021.
“We are aware of some leading indicators that indicate a decline in activity in non-residential construction, but so far we do not see much evidence of this,” he said. “Our company occupies an advantageous position in attractive segments of the non-residential construction market.”