‘Stable and Resilient’ Demand Drives Record Quarter for Nucor
Steel company Nucor Corp. executives on July 21 reported record quarterly profits and said demand from their most important customer groups remains “stable and resilient.”
Charlotte-based Nucor posted a second-quarter profit of $2.7 billion, up from nearly $1.6 billion in the same period of last year. Net revenues rose 34% year over year to $11.8 billion even though total steel mill shipments slipped 4%; the company’s average price per ton jumped 44% but its cost of products sold rose “only” 22%.
President and CEO Leon Topalian and his team credited continued strength in the nonresidential construction sector as the main driver of that profit growth but also noted their bar and plate mills were more profitable than in the spring of 2021.
Looking ahead, Nucor’s leaders don’t expect the current quarter’s results to match or top the record numbers from the spring because steel mills volumes and prices will fall somewhat. And while some backlogs are retreating from record levels, executives pointed out they’re still 30% to 50% higher than they were between 2015 and 2019. Meanwhile, demand from companies in key sectors such as construction and vehicle manufacturing – from, as Executive Vice President Al Behr said, “companies that buy our steel and make something out of it” – is still very strong. That, the Nucor team said, will endure for what remains of this year and into 2023, when it will also be aided by tailwinds for infrastructure and energy projects.
While positioning itself to capitalize on that enduring demand, Nucor also has been active in the M&A market—particularly in its downstream segment, where it has in the past year acquired makers of insulated panels, steel racking products and garage and overhead doors. Topalian suggested more deals for such companies, which he said move Nucor “one standard deviation outside […] traditional steel-making, are in the offing.
“The pipeline is rich. I think it’ll get richer as we move forward,” Topalian said. “We will continue to be very deliberate and very strategic with our long-term goals.”
Shares of Nucor (Ticker: NUE) popped more than 9% July 21, pushing the company’s market capitalization to more than $34 billion. Year to date, they have climbed nearly 15%.
