Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Commercial Metals Company (CMC) reported the results of its full-year fiscal 2020, ended Aug 31, and Q4 on Thursday, indicating improvements in steel product shipments and increased earnings, despite challenges presented by the COVID-19 pandemic.


The company expects to see finished steel volumes in its North American and European operations reach normal seasonal trends in Q1 FY 2021, but with some damaging effects in North American markets due to the recent Gulf Coast storms.


CMC believes steel shipments in the near-term will likely be supported by the company’s strong construction backlog. Margins are expected to suffer in Q1 2021 in the North American segment due to the recent scrap price increases, although those would be partly mitigated by steel price increases during the quarter.


Long products in Europe are projected to sustain challenges from rising import volumes but demand is strong due to the construction industry’s rebound and industrial production recovery in Central Europe.


Looking ahead, CMC anticipates its continuing efforts will produce stronger margins, as its third rolling line in Poland will be commissioned near the end of fiscal 2021. The company also recently announced the construction of a third micro mill to be completed in fiscal 2023.


North America

In FY 2020, CMC’s external steel product shipments increased by 4.3pc to 2.8mn nt (2.6mn mt) from 2.7mn nt in FY 2019. Steel product tons shipped in Q4 2020 were 732,000nt, up 3pc from 711,000nt shipped in Q4 2019.


The North America segment reported an adjusted EBITDA of $174.2mn in Q4 2020, a 14pc increase compared to $152.5mn generated in Q4 2019. The improvements were attributed to decisions made regarding non-raw material costs, mill cost performance, lower operating costs at downstream locations, and the decision to cut Steel California’s melt operations while replacing billet supply from less costly plants.



CMC’s external steel product shipments in Europe inched up by 0.82pc to 1.47mn nt in FY 2020 from 1.46mn nt last fiscal. Steel product tons shipped in Europe in Q4 2020 were 380,000nt, a 2.1pc decline from 388,000nt in Q4 2019.


The Europe segment generated an adjusted EBITDA of $22.9mn in Q4 2020, increasing nominally against adjusted EBITDA of $22.7mn in Q4 2019. Shipments fell modestly in the quarter compared to the prior-year quarter but were offset from a $10.7mn carbon credit received in Q4.


The company’s total net sales declined by 6.4pc to $5.48bn in FY 2020, from $5.83bn last year. Total net sales dropped by 9.5pc to $1.41bn in Q4 2020 from $1.54bn in the same quarter last year.


For the full year, the company’s earnings from continuing operations increased by 28.6pc to $278.3mn from $198.8mn in the prior year. Earnings from continuing operations fell by 21.1pc to $67.8mn in Q4 2020 from $85.9mn in Q4 2019.

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