Nucor Executives Stick to Positive Demand Growth Outlook
An air pocket? A fall off a cliff? A very hard landing? Leon Topalian isn’t having the doom and gloom about the U.S. manufacturing economy.
The chairman, president and CEO of steel manufacturer Nucor Corp. told analysts April 29 his team is seeing healthy activity from many segments of its customer base and pushed back against the idea that some companies’ stockpiling earlier this year means order books will broadly dry up in a few weeks. There will be no material impact, Topalian said, from pull-forward spending and Nucor leaders’ expectation for demand growth are still “generally in line” with their upbeat outlook from early this year.
“Our commercial teams are interacting with our customers and talking to them each and every day. So their confidence that our customers are describing that their customers have is significant,” Topalian said after Nucor reported its first-quarter results. Soon after, he added that “what we are not seeing is […] this massive buildup and a drop-off and a holding pattern of projects not being let. We are seeing the opposite. And we’re seeing these things come to fruition because [customers] are taking the deliveries.”
To back up sentiment, Topalian—who has led Nucor since the beginning of 2020—pointed to several factors:
- The company’s fabricator customers, he said, don’t build up large inventories as a matter of practice, and they are still doing fine
- Nucor’s sheet product sales have seen “no drop-off whatsoever,” and the recent pre-buying doesn’t look like it will hurt order flows going forward
- Many of the long-term trends driving Nucor’s growth aren’t abating: Investments in energy equipment, semiconductor and other advanced technology plants and infrastructure projects such as data centers and bridges are still being pushed forward
Topalian said it’s still early days when it comes to money flowing from the faucets of the Bipartisan Infrastructure Law and the CHIPS Act
During the first three months of this year, Charlotte-based Nucor produced a net profit of $156 million on net sales of more than $7.8 billion. In early 2024, those numbers were $845 million and about $8.1 billion; the biggest driver of the bottom-line drop was a more than $600 million increase in the company’s input costs.
Looking to the second quarter, executives expect profits to rise in all three of the Nucor’s operating segments, with the steel mills segment forecast to produce the most notable jump from its $241 million pre-tax earnings in Q1 thanks to higher selling prices.
On their conference call, Topalian and his lieutenants did note that the commercial construction market is slowing and said the railcar and barge sectors also are soft. There are some other headwinds to more growth, too, including high-level concerns about consumer confidence and labor trends.
But overall, the executives—who have been supportive of President Donald Trump’s tariff strategy—see more support for than obstacles to Nucor’s plans. And they’re sticking to their $3.0 billion capital spending budget for 2025, which will advance a hatful of projects scheduled to come online between later this year and the end of 2027.
Shares of Nucor (Ticker: NUE) rose nearly 2% April 29 to $118.77. Over the past six months, however, they are still down about 20%, a move that has cut the company’s market capitalization to about $27.4 billion.
