Earlier this week, Harsco Corporation (HSC - Snapshot Report) received as many as three multi-year contracts for a total value surpassing $135 million. These awards pertain to providing steel mill services to the regions of Bahrain, Sweden and Chile.
The Bahrain contract is for the construction of the first steel mill of the region at the Hidd Industrial Area. The United Steel Company (SULB) is nearing completion of the site and has given a five-year contract to Harsco for its slag management services catering to the production of nearly one million tons of steel per year, which again is assumed to expand in the forthcoming years.
Sweden’s steel manufacturing giant, SSAB Swedish Steel AB (SSAB) has awarded the second contract to Harsco for its inexpensive and advanced slag management services at its heavy plate mill, Oxelosund. The contract is for over a ten-year period and includes a Ferrocut operation for restructuring and management of extensively large scrap materials.
The third award came from Gerdau AZA steelworks of one of the most prosperous Latin American economies, Chile, for providing slag process management, metal recovery services and slag aggregate selling services. Having been awarded a six- year contract, Harsco is expected to start its on-site services by its third quarter of 2012.
Management expressed its alacrity regarding these wins by averring that these are the fruits of its long-lasting reputation and unblemished goodwill which allow for prolific expansion of businesses across regions incipiently. Judging by the current situation, it seems that the company is quite steadily advancing towards achieving an outstanding performance in the upcoming quarter from its Rail segment.
Harsco should remain wary of the stiff competition it faces in the industry. Such ominous players include W. W. Grainger, Inc. (GWW - Analyst Report), TMS International Corp. and Scansource Inc. (SCSC - Snapshot Report).
The current Zacks Consensus Estimates for Harsco are$0.04 and $1.56 for the first quarter and full year 2012, respectively. The company currently retains a Zacks #3 Rank, which translates into a short-term ‘Sell’ rating. However, we maintain a long-term ‘Neutral’ recommendation on the stock.