Nucor second quarter profit rises

CHARLOTTE -- Nucor Corp., a steelmaker and scrap-metal recycler, said today its profit climbed 40 percent in the second quarter.

But its shares fell more than 4 percent in what one analyst said reflected disappointment that the company failed to give more specific earnings guidance for the current quarter and concerns about the economic outlook.

For the period ending July 1, the Charlotte-based company reported net earnings of $452.8 million, or $1.45 per share, compared to $322.7 million, or $1.01 per share, in the same quarter of 2005.

That easily beat the consensus estimate of $1.33 a share by analysts surveyed by Thomson Financial.

But its shares dropped $2.09, or 4.2 percent, to $48.05 in morning trading on the New York Stock Exchange.

Chuck Bradford, an independent, New York-based analyst who tracks the steel industry, said Nucor hit his projected earnings per share number but that investors may have been spooked by the fact that the company did not release numerical guidance for the current quarter, something it has done in the past.

All the company offered in the way of third-quarter guidance was a statement that "The strong business conditions experienced in the second quarter should continue through the third quarter and well into the fourth quarter."

"Maybe the guidance would have been well below" what competitors have offered, Bradford said.

He also said investors have been shying away from companies involved in cyclical businesses following recent comments by Federal Reserve Chairman Ben Bernanke that the economy may be slowing.

"By the end of the day (Thursday) everything cyclical" was getting hammered, Bradford said.

Nucor shares are still closer to the upper end of their 52-week range of $24.50 to $60.30.

Net sales rose 21 percent to $3.81 billion compared with $3.15 billion in the second quarter of 2005. Average sales price per ton was up 5 percent over the second quarter of 2005.

Nucor said it shipped a record total of 5.8 million tons to outside customers in the second quarter, up 15 percent over the year-ago period and a 4 percent increase over the first quarter of this year.

Nucor owns minimills that rely on recycled scrap steel to make new steel. As a result, the cost of scrap is a key indicator. Nucor said the $247 per ton it paid in the second quarter was flat compared to $246 per ton in the year-ago period, but up 4 percent compared with the $237 per ton paid in the first quarter.

Energy costs were essentially flat when compared to the year-ago period and down $4 per ton from the first quarter to the second quarter.

The company said that beginning with its Aug. 11 dividend payment, the supplemental dividend rate will rise from 25 cents per share to 50 cents per share, making the total dividend 60 cents per share.

During the second quarter, Nucor acquired Connecticut Steel Corp. for $43.9 million in cash. The facility produces wire rod and rebar, as well as wire and structural mesh products.

Also in the quarter, Nucor announced plans for three new facilities: a factory to produce pre-engineered steel building systems, to be built in the West; a galvanizing steel facility that will be added to an existing plant in Decatur, Ala.; and a mill in the South that is to produce high-quality steel bars.