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Nucor Guides Lower Q4 Earnings

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Nucor Corporation (NUE - Free Report) has divulged its earnings expectations for fourth-quarter 2013 which are lower than what was achieved a year ago. The North Carolina-based steel maker envisions earnings for the quarter to be in the band of 35 cents to 40 cents per share, below 43 cents registered a year ago and 46 cents in the previous quarter. Analysts polled by Zacks are currently expecting earnings of 42 cents a share on average for the quarter.

Nucor expects its fourth quarter results to include inventory-related expenses of $30 million (or 6 cents per share). This compares with an inventory credit of $18 million and $71.9 million in third-quarter 2013 and fourth-quarter 2012, respectively.?? ??

Separately, Nucor and its partner Encana Oil & Gas (USA) Inc., a unit of Encana Corporation (ECA - Free Report) , decided to temporarily halt drilling new natural gas wells given the prevailing weak natural gas pricing environment. The suspension will cut Nucor's capital spending for 2014 by roughly $400 million.
Shares of Nucor, which are up roughly 22% so far this year, fell around 2% in the trading session yesterday. The stock closed at $51.51, losing 1%. ??

Nucor sees improved profitability for its sheet steel business in the fourth quarter despite the planned outage in its sheet mill in Berkeley County, S.C.?? Higher demand and improved pricing are expected to support the results. However, the company expects lower operating performance in its bar and structural mills business due to planned outages during the fourth quarter.

Nucor expects lower results in its raw materials business in the fourth quarter as a result of higher start-up costs at its new Direct Reduced Iron (DRI) plant in Louisiana and additional expenses associated with the collapse of a storage dome at a plant in Louisiana in Sep 2013. ??

Nucor???s third-quarter 2013 profit, reported in Oct 2013, jumped 34% year over year to $147.6 million (or 46 cents a share), aided by improvement in demand across some end-markets and restocking of inventory by customers. ??

Adjusted (excluding special items) earnings of 49 cents per share topped the Zacks Consensus Estimate by 11 cents. The adjusted earnings exclude charges of $14 million or 3 cents a share associated with the storage dome collapse.

The storage dome collapse at Nucor Steel Louisiana in St. James Parish led to a partial write down of inventory and fixed asset balances related to it. The collapse also delayed the opening of the new DRI plant being constructed at the site. Nucor expects the DRI facility to start production by end-2014. ??

Nucor, a Zacks Rank #3 (Hold) stock, is seeing strength across end markets such as automotive, general manufacturing and energy. However, excess steel supply, weak pricing and a soft commercial construction market are expected to continue weighing on the company???s performance.

Better-ranked stocks in the steel and related industries include United States Steel Corp. (X - Free Report) and Worthington Industries, Inc. (WOR - Free Report) with both holding a Zacks Rank #2 (Buy).

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