Steel Dynamics reports losses for 2015 due to ‘challenging’ environment
1/26/2016 9:41 AM
Steel Dynamics reports losses for 2015 due to 'challenging' environment
FORT WAYNE — Steel Dynamics Inc. on Monday announced fourth-quarter and full-year financial results.
SDI operates a steel mill and steel fabricating plant near Butler and metal recycling sites in Auburn and Waterloo.
Excluding non-cash asset impairment charges related to SDI’s metals recycling operations, the company’s adjusted fourth-quarter 2015 net income was $22 million, or $0.09 per diluted share, on net sales of $1.6 billion. With the impairment charges, the company reported a fourth-quarter net loss of $253 million, or $1.04 per diluted share.
SDI said it determined that the fair market value of its metals recycling operations was less than its carrying value, due to the weak global scrap commodity outlook, resulting in asset impairment charges of $435 million.
The prior year’s fourth-quarter net sales were $2.5 billion, with adjusted net income of $97 million, or $0.40 per diluted share, Third quarter 2015 net sales were $2.0 billion, with net income of $61 million, or $0.25 per diluted share.
“The fourth quarter 2015 market environment was one of the most challenging in recent history for our steel and metals recycling operations,” said Mark D. Millett of Auburn, SDI’s chief executive officer. “The domestic steel industry operated at production rates below 65 percent in November and December, representing the lowest levels this year caused by ongoing pressure from unfairly traded steel imports, customer destocking and seasonally lower demand. Enabled by our diversified and value-added product portfolio, our steel operations were again able to maintain a higher-than-industry-average production utilization rate at 73 percent for the fourth quarter 2015.
Millett added, “The automotive market remains strong, and construction continues to show incremental improvement, as current industry forecasts suggest additional year-over-year growth in 2016. … Historically, the construction industry has been the largest single domestic steel consuming sector, and it is continuing on an upward trend.”
SDI said its annual 2015 net sales were $7.6 billion compared to $8.8 billion in 2014, a decrease of 13 percent, based on significantly lower product pricing. A dramatic drop in global commodity prices caused the average full-year 2015 selling price for the company’s metals recycling operations to decline more than 36 percent year-over-year.
SDI said due to sustained high levels of unfairly traded steel imports, the average full-year 2015 selling price for its steel operations decreased $152 per ton, or 18 percent.
Adjusted annual 2015 net income was $178 million, or $0.74 per diluted share, excluding non-cash asset impairment and other charges. Including those charges, the annual 2015 net loss was $130 million, or $0.54 per diluted share.