DOW JONES NEWSWIRES
Commercial Metals Co.(CMC) reported Tuesday that it swung to a
fiscal third-quarter loss as weak demand and falling prices
contributed to the second-straight quarterly loss for the steel
manufacturer and recycler, which expects similar results in the
current quarter.
Chairman and Chief Executive Murray McClean said, "Global metal
markets may have tested the bottom during the quarter and though
some recovery has occurred, the markets, overall, remain
fragile."
Shares were up 5.1% at $14.95 per share in recent trading as the
loss wasn't as much as analysts expected. The stock is down 62% the
past year, though it has more than doubled since hitting a 4
1/2-year low of $6.25 per share in November, when demand for steel
was plunging.
McClean's comments reflected Chief Financial Officer William
Larson's predictions in late March that the industry was close to
the bottom. Analysts earlier this month expected at least a
short-term industry bounce as manufacturers restock inventories and
as sharply reduced production strengthened prices.
For the quarter ended May 31, Commercial Metals reported a loss
of $13.1 million, or 12 cents a share, compared with a prior-year
profit of $59.5 million, or 51 cents a share. The latest period
included after-tax inventory-accounting-related income of 26 cents,
compared with year-earlier expense of 71 cents a share.
Revenue tumbled 55% to $1.3 billion.
Analysts polled by Thomson Reuters most recently were looking
for a loss of 14 cents on revenue of $1.49 billion.
Scrap-metal prices remain well off last summer's peak, but the
company said Tuesday it saw signs of stabilization. McClean said
steel prices and consumption are on the rise in China, but most
international markets remain weak, with Poland the only bright
spot.
Commercial Metals, unlike most U.S. minimills, has a marketing
arm that buys and sells scrap metal, iron ore and coking coal
globally. McClean said it is seeing little effect from stimulus
spending, and that it doesn't expect infrastructure spending to
increase demand next year either. However, McClean expects prices
to stabilize at or near current levels.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com