Nucor Corporation (NYSE: NUE) reported a year-over-year decrease in earnings and sales for the second quarter of 2019. While earnings fell to $386.5 million or $1.26 per share from $683.2 million, or $2.13 per share in the second quarter of 2018, sales decreased 9% to $5.90 billion. Shares of Nucor closed down 1.55% at $54.70 yesterday.
“Unusually wet weather and aggressive supply chain destocking impacted mill order rates in the first half of 2019. We have seen lower volumes during the first half of this year resulting in a more challenging price environment,” said CEO John Ferriola.
Steel Mills segment earnings in Q2 decreased from the first quarter primarily due to the impact that service center destocking has had on order rates.
The profitability of the Steel Products segment improved in the June quarter compared to the March quarter, primarily due to typical seasonal patterns and improved weather conditions benefiting nonresidential construction markets.
For the third quarter of 2019, the Charlotte, North Carolina-based firm expects the performance from its Raw Materials segment to decrease compared to the second quarter of 2019 due to further margin compression in the company’s DRI businesses.
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Steel Products segment profit is expected to continue to improve in the third quarter compared to the second quarter. Steel Mills segment performance is estimated to be lower than this year’s second quarter, due primarily to lower prices for flat-rolled and plate steel.
Nucor sees healthy conditions in end-use markets that typically account for more than two-thirds of its steel shipments. The company is optimistic that pricing has bottomed for most products and estimates volumes to be more closely aligned with real end-use demand in the second half of the year.
Nucor stock, which plunged to a new 52-week low ($47.13) at the end of May, had dropped 15% in the past 12 months, while gaining 6% since the beginning of this year.
Nucor’s peers AK Steel (NYSE: AKS), Steel Dynamics (NASDAQ: STLD), and U.S. Steel (NYSE: X) also dropped to their yearly lows at the end of May facing the pressure from US-China trade war.