Nucor Provides 3Q Guidance

Nucor Corporation (NUE - Analyst Report) provided its outlook for the third quarter ending September 29, 2012. The company expects earnings to be in the range of 30 cents to 35 cents per share in the quarter, down from 57 cents per share earned in the year-ago quarter.

Nucor expects lower earnings in the third quarter due to the negative impact of approximately $26 million or 5 cents per share in inventory purchase accounting adjustments related to the acquisition of Skyline Steel LLC and a loss of $17.6 million or 4 cents on the sale of Nucor Wire Products Pennsylvania Inc assets. The company expects that the third quarter results will also include estimated LIFO credit of $80.0 million or 16 cents.

Nucor expects lower profitability at its steel mills due to continued increase in steel imports and sluggish economy. Meanwhile, volatility in scrap prices, along with a combination of political and economic uncertainty, has also disrupted supply stocking levels.

Nucor released its second quarter 2012 financial results in July 2012. The company reported adjusted (excluding special items) earnings of 43 cents per share in the quarter, missing the Zacks Consensus Estimate of 47 cents.

A sticky situation in Europe forced Nucor to incur an impairment charge of $30 million associated with its Duferdofin Nucor S.r.l. joint venture as utilization rates continued to remain depressed and lagged the budgeted levels through the first half of the year. The adjusted earnings excluded cost associated with the Skyline Steel buyout and a one-time gain.

Profit, as reported, dropped substantially by 63% to $112.3 million or 35 cents a share from $299.8 million 94 cents reported a year ago. Oversupply in the industry and a gloomy European market hurt Nucor’s bottom line in the quarter.

Even though shipments to outside customers increased 6% year over year to 5,925,000 tons, a 6% fall in average sales price constrained Nucor’s revenues. As a result, consolidated net sales dipped to $5.10 billion in the quarter from $5.11 billion in the same period last year, but managed to brush past the Zacks Consensus Estimate of $5.07 billion.

The company, which competes with Commercial Metals Co. (CMC - Snapshot Report) and United States Steel Corp. (X - Analyst Report), maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. We currently have a long-term Neutral recommendation on the shares of Nucor.