Commercial Metals Company (CMC Quick QuoteCMC - Free Report) has decided to sell its remaining steel distribution assets in Australia. The company will be executing the sale through its fully-owned subsidiary, G.A.M. Steel. The agreement for the asset sale was signed on Jun 10, 2016 and the deal is likely to conclude in Jul 2016, subject to closing adjustments. 

 

Commercial Metals’ G.A.M. Steel facility is located in Melbourne, Victoria. The company is highly recognized for steel distribution and processing services. It also owns a Cometals and an International Steel business in Australia. 

 

Commercial Metals reported adjusted earnings of 15 cents per share in the second quarter of fiscal 2016 (ended Feb 29), surpassing the Zacks Consensus Estimate of 11 cents. Net sales for the quarter came in at $1.0 billion. Historically, the second quarter of the fiscal is the company’s weakest quarter. However, it performed well in the last reported quarter. The Americas Fabrication segment particularly benefited from lower costs and higher margins year over year.

 

On the other hand, the International Marketing and Distribution segment incurred an adjusted operating loss of $2.3 million in the reported quarter, as against a gain of $7.4 million in the prior-year quarter. The decline was caused by lower volumes and margins in the company’s U.S. and European steel trading businesses. 

 

For the third quarter of fiscal 2016, management foresees a non-cash impairment charge for discontinuing the aforementioned operation. Including the impact of $13.5 million foreign currency translation loss, the company expects the charge to be in the range of $14−$16 million. 

 

Commercial Metals currently carries a Zacks Rank #3 (Hold).

 

Better-ranked companies in the steel space include Ryerson Holding Corporation (RYI Quick QuoteRYI - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and POSCO (PKX Quick QuotePKX - Free Report) and ArcelorMittal (MT Quick QuoteMT - Free Report) , both carrying a Zacks Rank #2 (Buy). 

 

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