Hurt by sharply lower demand in its recycling business and softer across-the-board segment earnings, Commercial Metals (CMC) halved its first-quarter earnings on Monday and fell short of expectations.
The Irving, Texas-based manufacturer of steel and other metal products reported net earnings of $49.7 million, or 42 cents a share, compared with a year-earlier $107.7 million, or 93 cents.
“We remained profitable for the third quarter in a row,” Commercial Metals CEO Joe Alvarado said in a statement.
Excluding a one-time gain related to the sell of its 11% interest in a Czech Republic joint venture, however, Commercial Metals earned just 13 cents a share, below average analyst estimates of 17 cents in a Thomson Reuters poll.
The results were largely impacted by a sharp profit decline in its Americas Recycling segment to $4.5 million from $20.8 million last year, attributable to soft demand that impacted both pricing and volumes.
The only business unit to partially offset the results was the International Marketing and Distribution group, which recorded an adjusted profit of $40.2 million compared with a loss of $4.1 million last year. Alvarado, however, said the segment is expected to exhibit softness until there is more clarity regarding the global economic turnaround.
Revenue for the three months ended Nov. 30 was $1.8 billion, down from $2 billion a year ago, narrowly missing the Street’s view of $1.89 billion.
Looking ahead, Alvarado said there is “growing evidence of an emerging recovery” in domestic construction markets, though customers are expected to remain cautious.